| Consensus | Consensus Range | Actual | Previous | |
|---|---|---|---|---|
| Composite Index | 52.1 | 52.1 to 52.1 | 53.0 | 50.6 |
| Services Index | 52.3 | 52.3 to 52.3 | 53.7 | 50.8 |
Highlights
The S&P Global US Composite Purchasing Managers' Index came in at 53.0 in May, up from 50.6 in April signaling an uptick in services sector activity while manufacturing output dipped and above the 52.1 consensus in the Econoday survey of forecasters.
Confidence in the outlook was the highest since January, while tariffs fueled noticeable accelerations in both input price and output charge inflation.
The US Services PMI Business Activity Index recorded 53.7 in May, speeding up from 50.8 in April, and beating expectations of 52.3 in the Econoday survey of forecasters.
There were reports from survey panelists of a more stable business environment compared to April, which helped to drive a rise in client spending, the report said. This was however broadly limited to domestic-based customers as foreign sales declined overall for a second successive month.
Rising backlogs in part reflected delays in the delivery of ordered equipment due to tariffs, which also drove up cost inflation to its highest in nearly two years, the report added. Increased costs were passed on to clients via the steepest increase in output charges since August 2022.
On the jobs front, the report said a more positive sentiment, plus a rise in current workloads, helped to support increased employment during May the third in as many months although it was a modest rise given the non-replacement of job-leavers.
Moreover, the rise in staffing levels was insufficient to prevent the steepest increase in work outstanding since last November, the report said.
Overall, sentiment was at its highest for four months (though remained well below the survey average). Panelists are also planning to raise their marketing and expand their business facilities over the coming year, the report added.
Confidence in the outlook was the highest since January, while tariffs fueled noticeable accelerations in both input price and output charge inflation.
The US Services PMI Business Activity Index recorded 53.7 in May, speeding up from 50.8 in April, and beating expectations of 52.3 in the Econoday survey of forecasters.
There were reports from survey panelists of a more stable business environment compared to April, which helped to drive a rise in client spending, the report said. This was however broadly limited to domestic-based customers as foreign sales declined overall for a second successive month.
Rising backlogs in part reflected delays in the delivery of ordered equipment due to tariffs, which also drove up cost inflation to its highest in nearly two years, the report added. Increased costs were passed on to clients via the steepest increase in output charges since August 2022.
On the jobs front, the report said a more positive sentiment, plus a rise in current workloads, helped to support increased employment during May the third in as many months although it was a modest rise given the non-replacement of job-leavers.
Moreover, the rise in staffing levels was insufficient to prevent the steepest increase in work outstanding since last November, the report said.
Overall, sentiment was at its highest for four months (though remained well below the survey average). Panelists are also planning to raise their marketing and expand their business facilities over the coming year, the report added.
Market Consensus Before Announcement
No revision from 52.1 for the composite and 52.3 for services is the call for the final.
Definition
US Services Purchasing Managers' Index (PMI) is based on monthly questionnaire surveys collected from over 400 U.S. companies which provide a leading indication of what is happening in the private sector services economy. It is seasonally adjusted and is calculated from seven components, including New Business, Employment and Business Expectations.
Description
Investors need to keep their fingers on the pulse of the economy because it indicates how various types of investments will perform. The Markit Services PMI provides advance insight into the services sector, which gives investors a better understanding of business conditions and valuable information about the economic backdrop of various markets. The stock market likes to see healthy economic growth which generally translates to higher corporate profits. The bond market prefers less rapid growth and is extremely sensitive to whether the economy is growing too quickly and causing potential inflationary pressures. The PMI data are also used by many Central Banks to help make interest rate decisions.
The IHS Markit Services Flash data give a detailed look at the services sector, the pace of growth and the direction of this sector. Since the service sector accounts for more than three-quarters of U.S. GDP, this report has a significant influence on the markets. In addition, its sub-indexes provide a picture of new business, employment, business expectations and prices.
The IHS Markit Services Flash data give a detailed look at the services sector, the pace of growth and the direction of this sector. Since the service sector accounts for more than three-quarters of U.S. GDP, this report has a significant influence on the markets. In addition, its sub-indexes provide a picture of new business, employment, business expectations and prices.
