US economy saw a notable rebound in private sector activity in May, with both PMI Manufacturing and Services rising to 52.3, lifting the Composite reading to a solid 52.1.
According to S&P Global, this improvement marks a turnaround from April’s slump and is largely attributed to improved sentiment following the temporary suspension of higher tariffs.
Chief Economist Chris Williamson highlighted that the rebound appears partly driven by companies and their customers attempting to “front-run” orders ahead of potential new tariff shocks after the current 90-day truce expires in July.
This preemptive behavior has led to the largest accumulation of input inventories” in the survey’s 18-year history, alongside a surge in “supply chain delays”, now the worst since the pandemic-era disruptions of 2022.
Most concerning for policymakers is the sharp rise in prices. The report flagged that the overall increase in prices charged for goods and services was the steepest since August 2022, signaling “consumer price inflation moving sharply higher.”
