S&P Global (S&P Global) released the latest data on Tuesday (24th) showing a moderate slowdown in business activity, mainly due to China’s restrictions on the new crown epidemic, supply chain tensions caused by the Russian-Ukrainian war hindering factory production, and rising prices reduce demand for services .
S&P Global announced that the initial value of the U.S. Markit Manufacturing Purchasing Managers’ Index (PMI) in May was 57.5, a 3-month low, in line with market expectations but lower than April’s 59.2.
The preliminary Markit Composite PMI fell to 53.8 in May, the slowest pace in four months, due to rising inflation pressures, worsening supplier delivery times and weak demand growth.
US May Markit PMI report:
- The initial value of the manufacturing PMI was 57.5, in line with market expectations of 57.5, and the previous value was 59.2, a 3-month low
- The initial value of the service PMI was reported at 53.5, lower than market expectations of 55.2, and the previous value was 55.6, a 4-month low
- The initial value of the comprehensive PMI was reported at 53.8, the previous value was 56
While the latest data on business activity fell short of market expectations, a rise above the 50 line indicates that companies are continuing to expand, in line with the current strong second-quarter economic growth.
U.S. economic growth shrank in the first quarter, dragged down by a record trade deficit, but domestic demand remained strong, with household spending rising and businesses ramping up investment in equipment.
Looking at the details of the data, the production index in May fell to 55.2 from 57.6 in April, mainly due to further shortages of raw materials and delays in supplier deliveries, which also pushed up the index of outstanding orders. The price index rose to 84.9 in May from 81.9 in April, a sign that factories are ramping up hiring. In addition, China’s anti-epidemic policy, which shut down its largest financial center, Shanghai, also affected U.S. factory business activities.
S&P Global Market Intelligence analyst Chris Williamson said business reports showed demand was under pressure due to overhead costs, rising interest rates and concerns regarding a broader economic slowdown.