Global manufacturing PMI falls in May, confidence lifts from Apr's low

Canada and Mexico reported the steepest output declines amid disruptions caused by US tariffs; production and exports also fell solidly in China. In contrast, eurozone producers reported a further increase in output, Chris Williamson, chief business economist at S&P Global Market Intelligence, wrote in an analytic piece.

US producers reported the steepest rise in selling prices of all economies surveyed in May, contrasting with prices falling on an average in Asia and the eurozone, with US supply delays also running high by international standards, he wrote.

The extent to which coming months see production and trade volumes suffer amid pay-back from this tariff front-running is a key risk to the near-term outlook, he noted.

However, it was encouraging to see manufacturers become more upbeat about their year-ahead outlooks in May, with future expectations improving across the board, and most notably in the eurozone, suggesting that business uncertainty and pessimism—while still elevated—may have peaked back in April, he wrote.

Only 14 of the 33 economies tracked by S&P Global's manufacturing PMI surveys reported higher production in May, with India continuing to report by far the strongest performance.

However, eurozone performance improved over the past two months, with output growing at a rate not seen for three years. Eurozone member states accounted for seven of the top 11 economies as far as production growth was concerned in May, he wrote.

Output also fell across Asia as a whole, dropping for the first time in just over one-and-a-half years. The fall was also the steepest since November 2022. Marked output falls were also reported in Indonesia, South Korea, Taiwan, Malaysia and Japan.

As a result, emerging markets collectively reported the first fall in manufacturing output since November 2022, the rate of decline slightly exceeding that seen in the developed markets, where a modest drop in production was reported for a third successive month.

Concerns over shortages of inputs in the United States were fueled in part by reports of supply delays hitting the highest since late-2022, with the incidence of supply issues in the country surpassed only by that seen in the United Kingdom.

The United States and the United Kingdom also reported the sharpest price increases. In contrast, prices charged by factories fell on average across Asia and the eurozone.

Having slumped in April to its lowest since October 2022, confidence among manufacturers worldwide about production in the year ahead rose in May. However, confidence remained lower than seen in March and lower than the average recorded over 2024, to hint at still-subdued sentiment, Williamson added.

ALCHEMPro News Desk (DS)