- Prior 51.0
- Manufacturing PMI 55.3 vs 53.8 expected
- Prior 54.5
- Composite PMI 51.7 vs 51.8 expected
- Prior 51.7
Key Findings:
- Subdued growth in May amid price surge
Comment:
Chris Williamson, Chief Business Economist at S&P Global Market Intelligence: “The damaging economic impact from the war in the Middle East is becoming increasingly evident in the business surveys. The ‘flash’ PMI data for May recorded only modest growth of business activity as demand was again squeezed by a further spike in prices and jobs were cut as firms worried over rising costs and the economic outlook. “Coming on the heels of a subdued April reading, the May PMI indicates that the economy will struggle to manage annualized GDP growth of much more than 1% in the second quarter. However, even this subdued pace of growth may not last. On average, over the past three months order book growth has slowed to its weakest for two years, and a boost from precautionary stock building due to concerns over further price hikes and supply delays will not last forever. “Demand also looks set to cool further in response to rising prices. Firms’ costs have jumped higher at a pace not seen since the energy price shock of 2022 and are being passed on to customers in the form of sharply higher selling prices. The survey price gauges therefore indicate that inflation looks set to rise further just as the economy cools.”
The improved performance in manufacturing was countered by a sluggish service sector. The agency notes that "factory growth was again in part supported by temporary stock building and both sectors reported that order book growth had been somewhat subdued by the ongoing war in the Middle East, most notably in terms of export sales".
S&P Global found that input costs jumped in May at the steepest rate since late-2022 on the back of rising war-related supply constraints and steep energy cost increases. Costs were not only cited as causing lower sales but also contributed to steepening job losses and a further rise in selling price inflation to its highest since August 2022.
