U.S. private sector activity accelerated sharply in May as both manufacturing and services topped forecasts, yet a surge in prices driven by tariff impacts pushed inflationary signals to levels last seen in August 2022.
S&P Global’s flash Purchasing Managers Indices (PMIs) for May painted a strong picture of U.S. economic momentum. The composite PMI rose to 52.1, a solid jump from April’s 50.6 and firmly above the neutral 50 line that separates growth from contraction.
Confidence Rebounds, But So Do Tariff Troubles
The services PMI improved from 50.8 to 52.3 and beat forecasts of 50.8. Similarly, the manufacturing PMI rebounded from 50.2 to 52.3 and exceeded estimates of 50.1.
Business sentiment, which had dropped to a two-and-a-half year low in April, rebounded in May to its highest level since January.
Chris Williamson, chief business economist at S&P Global Market Intelligence, said optimism was largely tied to “the pause on higher rate tariffs.”
Yet, …