| Consensus | Consensus Range | Actual | Previous | |
| Composite Index | 51.7 | 52.0 | ||
| Manufacturing Index | 53.5 | 53.0 to 53.8 | 55.3 | 54.0 |
| Services Index | 51.2 | 50.5 to 51.7 | 50.9 | 51.3 |
Highlights
The S&P Global US Composite Purchasing Managers' Index preliminary reading came in at 50.9 in May compared to 51.7 in April, and 50.3 in March. A sluggish service sector activity offset stronger activity in the first month of Q2, and economic activity over the past three months since the outbreak of war in the Middle East has been the weakest seen since the start of 2024.
S&P cautions that factory growth was again boosted in part by temporary inventory building and both sectors reported that order book growth had been somewhat subdued by the Iran conflict, especially export sales.
Surging input costs, which jumped in May at the steepest rate since late-2022 on the back of rising war-related supply constraints and steep energy cost increases, 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, the report said.
The US Services PMI Business Activity Index recorded 50.9 in May, compared to 51.0 in April, and 49.8 in March, below expectations of 51.2 in the Econoday survey of forecasters.
Service sector growth is on course for its weakest calendar quarter since late 2023. Service providers reported subdued demand reflected rising prices and uncertainty, notably among consumer-facing businesses and for exports, it said.
The Manufacturing PMI's preliminary reading came in at 55.3, compared to 54.5 in April, 52.3 in March and expectations for 53.5 in the Econoday survey of forecasters.
Manufacturing output rose at the fastest rate for just over four years, accelerating from April's already-robust pace. This is primarily due to precautionary stock building by customers that is fueling new orders. Order book growth in manufacturing was also purely domestically driven, with goods exports falling again, it added.
On the jobs front, overall employment fell in May for the second time in the past three months, with the rate of job losses reaching the highest since August 2024 - due to growing concerns over rising costs and deteriorating demand conditions.
However, whereas service sector jobs were reduced at the second-fastest pace seen since May 2020 (surpassed only by April 2024), manufacturing payrolls showed the largest rise for 11 months as factories raised headcounts to meet the recent upturn in orders, the report said.
Looking ahead, there is a stark divergence in sentiment. Service sector optimism is at its weakest since April 2025 and second lowest since October 2022. In contrast, manufacturers' optimism is at its highest level since February 2025 and one of the highest levels since the pandemic fueled by the recent upturn in orders and the ongoing anticipation of tariff-related reshoring.
Market Consensus Before Announcement
Manufacturing expected at 53.5 versus 54.5 and services at 51.2 versus 51.0.
Definition
The flash Composite Purchasing Managers' Index (PMI) provides an early estimate of current private sector output by combining information obtained from surveys of around 1,000 manufacturing and service sector companies. The flash data are released around 10 days ahead of the final report and are typically based upon around 85 percent of the full survey sample. The report tracks changes in variables such as new orders, stock levels, employment and prices across both manufacturing and services. Production is also tracked, defined as"production" for manufacturing and"output" for services. Results are synthesized into a single index which can range between zero and 100. A reading above (below) 50 signals rising (falling) output versus the previous month and the closer to 100 (zero) the faster output is growing (contracting). The report also contains flash estimates of the manufacturing and services PMIs. The data are produced by S&P Global.
Description
Investors need to keep their fingers on the pulse of the economy because it dictates how various types of investments will perform. By tracking economic data such as the purchasing managers' manufacturing indexes, investors will know what the economic backdrop is for the various markets. The stock market likes to see healthy economic growth because that 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.