US manufacturing growth set to cool as stockpiling fades, inflation risks rise: Report
New Delhi, June 1
US manufacturing's headline strength masks a fragile near-term outlook, with growth expected to slow once current stockpiling runs its course and inflation pressures intensify, S&P Global said in a report on Monday.
"The headline PMI has hit a four-year high, with strong factory production growth for a second successive month," said Chris Williamson, Chief Business Economist at S&P Global Market Intelligence.
"But since the outbreak of war in the Middle East we have seen production and demand buoyed by stock building as companies worry over rising prices and supply difficulties. This stockpiling was again widely evident in May and makes it hard to take an accurate reading on the underlying health of the manufacturing economy, as growth will cool once this stock build has run its course." Williamson added that "the resulting steep jump in producer costs sends a worrying signal that broader economy inflation has further to rise in the coming months."
May's seasonally adjusted S&P Global US Manufacturing PMI rose to 55.1 from 54.5 in April, the highest since May 2022 and the 10th straight month above 50. The upturn was led by production, which grew at the sharpest pace since April 2022. New orders also increased markedly, though growth was softer than in April and largely driven by clients building inventory ahead of expected price hikes and delays. Exports fell for the 11th month in a row as geopolitical instability and tariffs weighed on foreign sales.
Stock building showed up across the supply chain. Firms added to finished goods inventories for the second month running at the quickest pace since last November, while purchasing activity rose solidly to mitigate further price increases and disruption. Input stocks rose for the second successive month at the fastest rate since May 2025.
Price and supply pressures intensified. Manufacturing input costs rose at the fastest rate in nearly four years, driven by fuel and oil-related products, pushing the Input Prices index to its highest since July 2022. Supplier delivery times deteriorated to the greatest extent since August 2022, with the Strait of Hormuz closure adding to delays. Manufacturers passed costs on, raising output charges at the steepest rate since September 2022.
Employment saw a modest uptick, the best in five months, as firms hired on expectations of higher sales over 12 months. But confidence softened to a four-month low amid geopolitical concerns and higher inflation.
— ANI
Reader Comments
As someone who follows global trade, this report raises red flags. US manufacturing growth masking inflation risks – and the Strait of Hormuz closure adding to delays? That directly impacts oil prices and shipping. India imports a lot of crude, so if US inflation rises further, we'll feel it too through fuel costs. The Modi govt should keep a close watch on this for our fiscal planning. Not all is rosy.
This is what happens when you base growth on fear instead of real demand. Stockpiling is a short-term fix – once companies realize they have too much inventory, production will slow, and layoffs might follow. The US needs to address supply chain vulnerabilities and stop relying on tariffs that hurt exports. Good insight from S&P Global, though. The manufacturing sector is more volatile than it seems.
Honestly, this makes me appreciate India's PMI trends more. We've been consistently above 55 for a while, and our growth is driven by real domestic demand, not panic stockpiling. The US situation shows how fragile advanced economies can be when geopolitics overshadow fundamentals. Let's not get complacent, but this is a lesson in building resilient supply chains. Btw, exports falling for 11 straight months? That's a big deal for the US. 🇮🇳🚀
I work in logistics, and we've seen this firsthand with clients piling up inventory because they're scared of tariffs and supply delays. The PMI number is only part of the story – when you dig into the details, the input cost pressures are real. Fuel and oil prices are soaring, and that's not sustainable. The Fed might have to raise rates again to curb inflation, which could hurt everyone globally. Solid reporting, but the warning bells are loud.
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