Global PMIs: Front-loaded factory output unwinds – Standard Chartered

Manufacturing PMIs deteriorated at a faster rate in May versus April amid fading boost from front-loading. Coincident indicators were downbeat, but the US-China tariff truce helped to improve outlook. Broad global supply-chain disruptions remain contained for now, Standard Chartered's economist Ethan Lester reports.

Manufacturing output normalised in May

"Global aggregate PMI surveys for May suggest a faster contraction in manufacturing versus April, on fading tailwinds from front-loaded output and elevated trade policy uncertainty. Intermediate and investment goods production flipped into negative territory versus April; global employment levels declined across sub-sectors, despite an expansion in consumer goods output for the 22nd month running. Also, the decline in new export orders was deeper than for new orders in general. These data point to normalisation in global factory output following a month of tariff-related front-loading, though some economies – notably India – avoided the downturn."

"Unlike the coincident indicators, business evaluations on future activity significantly strengthened m/m across economies (with a few exceptions in CEE, South Asia and Malaysia); growth was likely boosted by the 18-month low base in April, which came before the US-China tariff truce."

"Meanwhile, input and output prices moderated m/m, as reported supply shortages remain relatively muted (except for steel and aluminium, which continue to face US sectoral tariffs, as well as textiles, given the end of de minimis exemptions), and as reported oil price pressures declined for the first month since October 2024. However, delivery times increased to six-month highs and average vendor lead times further lengthened versus April, posing upside risks to supply shortages if trade policy uncertainty continues or increases from current levels."