Brief: U.S. Manufacturing Activity Hits Second-Highest in 35 Months

Tariff-related concerns about global industrial activity eased with today’s flash manufacturing PMI prints for May, which showed improving business activity for the U.S., India, and the collective Euro Area.

May 22, 2025 • Est. Reading Time: 3 minutes

Mobius Intel Brief:

Tariff-related concerns about global industrial activity eased with today’s flash manufacturing PMI prints for May, which showed improving business activity for the U.S., India, and the collective Euro Area.

Key Intel

  • S&P Global’s flash U.S. manufacturing PMI gained to 52.3 in May from 50.2 in April, surpassing the trailing 10YR seasonally-adjusted median and notching the second-highest print in 35 months. The 2.1 pp M/M increase from April was the strongest improvement in the sector’s business conditions since June 2022. May’s data improves the outlook for domestic distillate demand after a lackluster print in yesterday’s EIA product supplied data.

  • According to S&P’s survey, “Factory production moved back into expansion territory after two months of decline, and new order growth hit a 15-month high. However, the biggest positive contribution came from inventories, which rose to the greatest extent recorded since the survey began in 2009.”

  • Another month of front-loaded inputs and the largest accumulation of inventories in the eighteen year history of the survey will buffer U.S. supply chains against transient tariff-related disruptions as the Trump administration’s trade deal deadline approaches on July 8. Expectations for significant consumer price growth in PCE/CPI inflation indicators could be surprised to the downside in May—as occurred in March and April.

  • Across the Atlantic, the Flash HCOB Euro Area Manufacturing PMI gained to 49.4 in May, marking the slowest contraction in the Euro Area manufacturing sector since August 2022.

  • The Flash HSBC India Manufacturing PMI rose to 58.3 in May, signaling the sector’s fastest expansion since June of last year on strong growth in production and new orders—constructive for India’s emerging role as the global crude market’s primary demand growth driver.

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