Markit US PMI manufacturing rose 0.1 to 56.6 in May, hitting 44 month high. PMI services rose 1.1 to 55.7, at 3 month high. Both were above market expectations.

PMI composite rose to 55.7, up from 54.9, at a 3 month high.

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Comments from Chris Williamson, Chief Business Economist at IHS Markit:

“The flash May PMI surveys point to an encouragingly solid pace of economic growth of 2.5-3% with monthly job gains running at just over 200,000, though the interesting action is coming on the prices front.

“Input costs measured across both manufacturing and services are rising at the fastest rate for nearly five years, with the goods-producing sector seeing the steepest cost increases for seven years in recent months.

“Furthermore, supplier delivery delays, a key forward-indicator of inflationary pressures, have risen to the highest seen in the 11 year survey history. Rising demand has stretched supply chains to the extent that suppliers are increasingly able to demand higher prices. At the same time, higher oil and energy prices are pushing up firms’ costs.

“Business optimism meanwhile remains at a three-year high, with companies commonly expecting rising demand to help drive business growth, setting the scene for further strong survey results in coming months.”

Full release here.

Also from US, new home sales dropped to 662k annualized rate in April, below expectation of 678k.

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