Economy

May Manufacturing Growth Slows, Demand Edging Down: PMI

Written by David Schollaert

June 5, 2022

The S&P Global US manufacturing PMI – another measure of manufacturing – fell to 57 in May, its lowest level in four months, and a noticeable turn from the market improvement the month prior.

Last month’s results are down from 59.2 in April and a “flash” May reading of 57.5. (Recall that a reading above 50.0 indicates growth.) The report said the manufacturing upturn slowed amid cooling demand, surging costs, and material shortages. In particular, cost inflation accelerated to the fastest pace in six months even though delivery delays were the least widespread in 16 months.

“A cooling in new orders growth was in part linked to customers pushing back on high prices, though also reflected shortages and growing concern about the outlook, said Chris Williamson, S&P Global Market Intelligence’s chief business economist.

Output growth at manufacturers was strong, driven by client demand, and an uptick in new orders supported the upturn in production. Despite the gain, the rate of expansion was the slowest over the past three months due to material shortages and delivery delays. A softer rise in order book totals resulted as inflows began to stymie growth momentum, the report said.

New orders rose sharply in May, with higher new sales inflows often attributed to a sustained rise in customer demand and the acquisition of new clients. That said, the pace of growth softened further from March’s recent peak and was the slowest seen since January. Foreign client demand also softened, with export orders rising at the slowest rate for four months. Global uncertainty due to the war in Ukraine and challenging logistics reportedly weighed on the upturn.

“A solid expansion of manufacturing output in May should help drive an increase in GDP during the second quarter, with production growth running well above the average seen over the past decade,” said Williamson. “However, the rate of growth has slowed as producers report ongoing issues with supply chain delays and labor shortages, as well as slower demand growth.”

By David Schollaert, David@SteelMarketUpdate.com

David Schollaert

David Schollaert is a senior analyst for Steel Market Update. David joined SMU after more than a decade in the metals and mining industry in a myriad of different roles. Much of his early experience and expertise were within the coverage and analysis of steel-making raw materials and served previously as senior editor of the CRU Prices Service. Most recently, however, before his return to market analysis, David held roles as a metals buyer and an operations manager for raw material suppliers. Based in CRU’s Pittsburgh office, David can be reached at david@steelmarketupdate.com or 724-720-1008.

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