Input Stories

The S&P Global Flash U.S. Manufacturing PMI rose from 50.2 in April to 52.3 in May, a three-month high and above the 50-point marker that signals growth in business conditions. This is also the largest increase in business conditions since June 2022. Factory production edged back into growth after two months of decline, led by new order growth that hit a 15-month high. Nevertheless, the most significant contributor to PMI growth was an increase in inventories, which rose to the greatest extent since the start of the survey in 2009, due to firms stockpiling as a safeguard against tariff impacts. Longer delivery times, associated with busier manufacturing activity, also aided the rise in the manufacturing PMI. Meanwhile, employment fell for the second consecutive month, putting downward pressure on the PMI.

Overall business activity improved after April’s 16-month low but remained subdued at 52.1 amid continued fears about tariffs. Export orders fell for another month, especially in services, and prices for both goods and services surged at rates last seen in August 2022, stemming from tariff-related costs and indicating sharp consumer price inflation. Manufacturers’ selling prices posted the largest monthly increase since September 2022, and input costs rose at the fastest rate since June 2023.

Meanwhile, optimism about future business conditions rebounded to the highest level since January after falling to a two-and-a-half-year low in April. Sentiment lifted amid a pause on additional tariffs and improved economic conditions. For manufacturers, optimism reached a three-month high, and goods producers displayed greater optimism about reshoring production and switching to domestically sourced goods. Nevertheless, optimism is still down from 2024 averages as anxieties about supply chain disruptions, government policies and tariffs still abound.