U.S. May S&P PMIs - Manufacturing stronger still, Services still subdued
May’s preliminary S and P PMIs show increasing strength in manufacturing at 55.3 from an already significantly improved 54.5 in April, reaching its highest since May 2022. Services at 50.9 are however marginally softer from April’s 51.0, but still holding above March’s dip below neutral to 49.8.
The strength of manufacturing follows an improved Empire State manufacturing index for May released last week and suggests the softer May Philly Fed reading released earlier today could prove erratic. On balance the picture is of a healthy manufacturing sector supported by strong business investment.
The subdued services index suggests higher gasoline prices are weighing on consumers, though March’s move below neutral has not been sustained, with lower taxes providing some offset to gasoline strength. The S and P services PMI is not well correlated with the ISM services index which has remained quite firm even if coming off a very strong February in March and April.
