US manufacturing PMI rebounds strongly to 52.3, hitting a three-month high.

The latest data released by S&P Global shows that in May 2025, the initial value of the US manufacturing PMI rose to 52.3, reaching a three-month high, far exceeding market expectations of 50.1 and also higher than the previous value of 50.2. This is the most significant improvement in manufacturing business activity since June 2022, indicating a recovery in the US manufacturing sector after two months of contraction. This rebound not only reflects a rise in manufacturing output, but also shows that the growth rate of new orders has reached the highest level in the past 15 months. However, the biggest "contributor" to the surge in PMI comes from inventories. Data shows that the growth in purchasing inventories has hit a historical high since the start of the survey in 2009. Analysts believe that this phenomenon is related to businesses and customers stockpiling goods in response to potential tariff issues. Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, pointed out: "Business confidence in May rebounded from April, mainly due to the suspension of high tariffs. However, companies still have concerns before the end of the 90-day tariff grace period in July, leading to a significant accumulation of input inventories." In terms of the supply chain, manufacturing delivery times have lengthened, reaching the most severe level in 31 months. This is usually interpreted as a signal of a busier supply chain. However, employment data is weak, with manufacturing employment numbers declining for the second consecutive month. Meanwhile, price pressure has become a focus of market attention. In May, manufacturers' selling prices recorded the largest monthly increase since September 2022, while input costs rose even more, hitting a new high since August 2022. Prices in the service industry also rose in sync, reaching the highest level since April 2023. In terms of the composite index, the overall PMI rose to 52.1 in May, also higher than the previous value of 51.2, highlighting an overall improvement in economic activity. Williamson warned, "Although current output is showing a rebound, business sentiment and growth momentum remain relatively subdued. The sharp rise in prices in May is mainly due to tariffs pushing up import costs, forcing companies and suppliers to pass on cost pressures to consumers. The overall increase in prices of goods and services is the most severe since August 2022, indicating that US consumer price inflation may significantly rise in the coming months." Furthermore, the rebound in the stock market and the easing of tariff policies are also seen as important factors in the recovery of the manufacturing sector. However, price increases and supply chain delays may bring uncertainty to future economic growth. Market participants point out that although the May PMI data shows signs of a strong recovery in US manufacturing, caution should be exercised against the potential risk of inflation resurgence, especially in a high-interest rate environment, which will affect the policy path of the Federal Reserve. In the coming months, the direction of tariff policies and their impact on business inventories and price transmission will be important indicators to observe the operation of the US economy.