PMI signals modest improvement in US manufacturing sector: S&P Global

Meanwhile, business confidence picked up and positive expectations regarding the future for the sector contributed to the hiring of additional staff, a renewed rise in purchasing activity and a build-up of stocks of finished goods.

The rate of input cost inflation quickened to the fastest in the month in just over a year, with firms raising their selling prices in response.

The seasonally adjusted S&P Global US manufacturing purchasing managers’ index (PMI) rose to 51.3 in May, after having posted in line with the 50 no-change mark in April. The reading signaled a modest improvement in the health of the manufacturing sector, the fourth in the last five months.

May saw a renewed expansion in new orders, following a modest reduction in April. While customer demand improved during the month, overall economic conditions remained muted, according to respondents in an S&P Global survey.

As such, the rate of expansion in new orders was only marginal. In fact, the rise in total new business was softer than that seen for new export orders, which increased at the fastest pace in two years.

Firms reported signs of improving demand in Europe, alongside growth in new orders from Asia, Canada and Mexico.

The increase in new orders, alongside better material availability, led manufacturers to expand production at a solid pace in May, with the rate of growth quickening from that seen in April.

Firms were also confident that production will rise over the coming year, thanks to optimism that the renewed expansion in new orders will be sustained in the months ahead. Plans to increase capacity also contributed to positive sentiment, S&P Global said in a release.

Optimism regarding future new orders and production requirements encouraged manufacturers to take on additional staff, raise purchasing activity and accumulate stocks of finished goods.

Employment increased for the fifth consecutive month in May, and at the fastest pace since July 2023.

Meanwhile, the rise in purchasing activity in May was the first in three months, but only marginal.

Stocks of finished goods on the other hand increased for the second month running, and to a larger extent than in April.

Expansions to capacity and recent muted demand conditions meant that manufacturers continued to lower their backlogs of work. The pace of depletion was only slight, however, and the weakest since February.

The rate of input cost inflation continued to accelerate, quickening for the third consecutive month in May to the fastest since April 2023. The latest increase was also sharper than the pre-pandemic average.

Fibre2Fashion News Desk (DS)