US Business Boom: S&P Reports Fastest Growth in Over Two Years

Business activity in the US surged in May, according to the S&P Global Flash US PMI Composite Outlook Index, which rose to 54.4, the highest level in over two years.

“The US economic upturn has accelerated again after two months of slower growth, with early PMI data signaling the fastest expansion in just over two years in May,” said Chris Williamson, chief business economist at S&P Global Market Intelligence. “The data put the US economy back on course for another solid GDP gain in the second quarter.”

The significant growth in business activity was led by the services sector, which has shown remarkable resilience and growth. Manufacturing also posted gains, contributing to the overall economic upturn. Key highlights from the report include:

• The S&P Flash US Services Business Activity Index rose to 54.8 in May, marking a 12-month high.
• The S&P Flash US Manufacturing Output Index increased to 52.4 in May, reaching a two-month high.
• The S&P Flash US Manufacturing PMI climbed to 50.9 in May, also a two-month high.

“Not only has output risen due to renewed order book growth, but business confidence has lifted higher, signaling brighter prospects for the year ahead,” Williamson noted. However, he cautioned that companies remain cautious about the economic outlook due to uncertainties over inflation, interest rates, geopolitical instabilities, and the upcoming presidential election.

Despite the positive momentum, the labor market continued to face challenges. Companies reported lower employment levels, although the rate of job losses moderated with the improved business confidence. This mixed signal indicates that while businesses are optimistic, they are still wary of making significant changes to their workforce.

Another key concern highlighted by Williamson is the elusive nature of the Federal Reserve’s 2% inflation target. With ongoing uncertainties about inflation and interest rates, companies are proceeding with caution.

About Purchasing Managers’ Index (PMI)

The PMI (Purchasing Managers’ Index) is a crucial economic indicator, produced by S&P Global, based on original survey data from a representative panel of around 800 US manufacturing and service companies. The Global Flash US Composite PMI is a weighted average of the Manufacturing Output Index and the Service Business Activity Index. These indices are based on the survey question: “Is the level of production/output at your company higher, the same, or lower than one month ago?”

Final data for May will be published on June 3 for manufacturing and June 5 for services and the composite indicator, providing a more comprehensive view of the economic performance and future outlook.