While regional Fed surveys and private sector sentiment measures have been screaming pessimism, 'hard' data has refused to bend the knee to TDS (or whatever establishment narrative is produced next).
This morning, the most important of the 'soft' survey data prints finally gave up and surged higher with both US Manufacturing & Services PMIs rising more than expected...
The Manufacturing purchasing managers index climbed to a three-month high of 52.3, fueled in part by the fastest growth in new orders in more than a year. Output expectations also rose to the highest since February.
The Services sector also jumped from 50.8 to 52.3 - two month highs.
The S&P Global flash May composite index of output rose 1.5 points to 52.1 after sliding a month earlier to the lowest since 2023, according to data released Thursday. Figures above 50 indicate growth, and the acceleration reflected expansion at both manufacturers and services providers.
“Business confidence has improved in May from the worrying slump seen in April, with gloom about prospects for the year ahead lifting somewhat thanks largely to the pause on higher rate tariffs,’’ Chris Williamson, chief business economist at S&P Global Market Intelligence, said in a statement.
While the figures indicate a welcome stabilization in both activity and sentiment, companies are having success passing on higher duties on imports of goods and materials.
A composite measure of prices charged accelerated for a third month to the highest since August 2022.
“At least some of the upturn in May can be linked to companies and their customers seeking to front-run further possible tariff-related issues, most notably the potential for future tariff hikes after the 90-day pause lapses in July,’’ Williamson said.
