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The S&P Global preliminary PMIs for May are projected to indicate a modest decline in the manufacturing sector.
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Investors anticipate a 25 basis points rate cut by the Federal Reserve in September.
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EUR/USD maintains its position above 1.1500, holding near three-year highs.
S&P Global is set to release the preliminary May Purchasing Managers’ Index (PMI) for the United States at 13:45 GMT on Thursday.
The report includes three key indicators: the Manufacturing PMI, the Services PMI, and the Composite PMI, which is a weighted average of the two. Readings above 50 indicate expansion, while those below 50 signal contraction. Released ahead of many official statistics, these monthly surveys provide early insights into economic activity, covering aspects such as output, exports, capacity utilization, employment, and inventory levels, and are widely regarded as reliable leading economic indicators.
In April, the Composite PMI declined slightly to 50.6 from 51.2 in March, suggesting a slowdown in growth momentum within the private sector. The Services PMI decreased to 50.8 from 51.4, and the Manufacturing PMI dipped to 50.2 from 50.7. Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, noted that April’s PMI data revealed a significant slowdown in business activity growth entering the second quarter, along with a drop in business optimism. He also highlighted rising price pressures, presenting a challenge for the Federal Reserve, which faces mounting pressure to support a weakening economy amid persistent inflation concerns.
What can we expect from May’s S&P Global PMI report?
Market forecasts predict only slight changes in May’s readings. The Services PMI is expected to hold steady at 50.8, while the Manufacturing PMI is projected to edge down slightly to 50.1 from 50.2.
Analysts at TD Securities commented ahead of the release: “The flash PMIs for May may reflect some optimism following recent easing in US-China trade tensions.” However, they also warned, “While we forecast the services index to rise to 52.0, we expect the Manufacturing PMI to fall into contraction territory.”
