The IHS Markit Flash U.S. PMI™ shows business activity growth falters to a three-year low.
Key Points
- Flash U.S. Composite Output Index at 50.9 (53.0 in April). 36-month low.
- Flash U.S. Services Business Activity Index at 50.9 (53.0 in April). 39-month low.
- Flash U.S. Manufacturing PMI at 50.6 (52.6 in April). 116-month low.
- Flash U.S. Manufacturing Output Index at 50.8 (52.7 in April). 35-month low.
Chris Williamson, Market Chief Business Economist Comments
“Growth of business activity slowed sharply in May as trade war worries and increased uncertainty dealt a further blow to order book growth and business confidence.”
“A decline in the headline ‘flash’ PMI to its lowest for three years pushes the survey data down to a level historically consistent with GDP growing at an annualized rate of just 1.2% in May. Worse may be to come, as inflows of new business showed the smallest rise seen this side of the global financial crisis. Business confidence has meanwhile slumped to its lowest since at least 2012, causing firms to tighten their belts, notably in respect to hiring. Jobs growth in May was the weakest seen for over two years. ”
“The slowdown has been led by manufacturing, but shows increasing signs of spreading to services. The survey data have been consistent with falling manufacturing output since February, but suggest that the sector’s woes intensified in May to mean factories will therefore likely act as an increasing drag on the economy in the second quarter. Trade wars remained top of the list of concerns among manufacturers, alongside signs of slower sales and weaker economic growth both at home and in key export markets. ”
“However, an additional concern is the spreading of the malaise to the service sector, growth of which slumped in May to one of the weakest since the global financial crisis. With the service sector’s performance being a key gauge of the health of domestic demand, this broadening-out of the slowdown poses downside risks to the outlook.”
Mike “Mish” Shedlock
It’s “booming”…..until it isn’t.Pretending works….until it doesn’t
Economy is constrained by labor. Competent employees are difficult to find as virtually everyone that wants a job has a job.
Want a boost in GDP?
Let in a million immigrants.
I don’t agree, I know many both discouraged capable unemployed workers as well as underemployed highly educated folk. There is an army of Uber/Lyft type underemployed delivery drivers here in LA. The job market today both from compensation and job availability perspectives does not compare with decades past. I am personally looking for a new gig and well over 1,000 people are applying to each of the skilled jobs I’m applying for online. We are a long ways from full employment at survival wages. If it weren’t for the Central Banks intervention we’d be in deflationary times
No, there are boatloads of competent employees who aren’t even being given the “time of day” by employers. Any reasonably advertised STEM/tech job gets hundreds of applications. 90%+ of which are summarily tossed into the garbage can, for example, without even so much as someone picking up the phone to talk to the applicant.
We need higher PMI/CPI so we get another big SS increase!
The Fed has been tightening and draining for roughly two years now and the market has been thrashing for the entire time, looking for a place to fall apart.
I think it will have found it with the next tick down on PMI and we can look for a rate cut as the plunge protection team swings into action in the second half.