In recent weeks, the US economy has demonstrated remarkable resilience, defying expectations of a slowdown. The S&P Global’s Flash U.S. Composite PMI, which measures activity in both the services and manufacturing sectors, surged to 54.4 in May from 51.3 in April. This unexpected increase, the highest level in 25 months, was met with surprise by economists who had predicted little change.
The services sector played a significant role in driving this growth, with its component of the PMI rising to 54.8 from 54.2 in April. Manufacturing activity also showed positive movement, climbing to 50.9 from 50 in the previous month. Readings above 50 indicate expansion, while values below 50 signal contraction.
The surge in economic activity follows a period of slower growth, indicating a strong turnaround for the US economy. S&P Global Market Intelligence’s chief business economist noted that the data suggest the US economy is poised for another strong GDP gain in the second quarter, building on this renewed momentum. However, recent PMI data was not as positive as other indicators suggested a cooling economy due to fewer job additions in April’s jobs report and slower growth in the preliminary GDP reading for the first quarter. These signs were generally viewed positively by investors as they coincided with efforts by the Federal Reserve to combat inflation.
However, recent developments have shifted market dynamics significantly following the release of strong PMI data earlier this month. Stocks experienced a downturn after
