U.S. Economy Slowed in May as Inflationary Pressure Persisted — S&P Global

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by Javier Fontdegloria

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The US economy lost further momentum in May due to weak demand as well as supply-chain constraints and higher costs, according to data from a Purchasing Managers survey published on Tuesday.

The S&P Global Flash Composite Output Index fell from 56.0 in April to 53.8 in May, its lowest level in four months. The index – which measures activity in both the manufacturing and services sectors – indicates the economy is expanding as readings came in above a threshold of 50.0 suggesting slower growth over the previous month.

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Chris Williamson, chief business economist at S&P Global, said the survey figures are in line with an annualized growth rate of 2%, but also suggest that recent economic growth is accelerating.

Activity in both the manufacturing and service sectors has come to a standstill. S&P Global said that growth, especially in the services sector, has slowed since March as the Covid-19 omicron wave showed signs of a decline in the impact of the reopening.

Flash US Services PMI fell from 55.6 in April to 53.5 in May, a four-month low and below the 55.0 consensus forecast by economists polled by The Wall Street Journal.

“Companies are reporting that demand is coming under pressure from costs of living, higher interest rates and concerns about a macroeconomic slowdown,” Williamson said.

For manufacturers, respondents reported strong and sharp expansion in production and new orders, and a slight reduction in supply and labor shortages, the report said.

Flash US manufacturing PMI fell from 59.2 in April to 57.5 in May, matching economists’ estimate of 57.4.

According to the survey, inflationary pressures have eased, showing signs of easing. Input prices for service providers increased at the fastest pace on record, while cost inflation among manufacturers was the fastest in the history of the series.

“Cost pressures have reached a new survey high, which, along with encouraging production and employment numbers, will fuel speculation about the need for further imminent aggressive rate hikes,” Mr Williamson said.

Write to Xavier Fontdegloria at [email protected]

Credit: www.marketwatch.com /

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