After the mixed picture from Manufacturing surveys (ISM ugly, PMI solid); both Services surveys – due this morning – were expected to rise in May.

S&P Global US Services PMI surged to 53.7 in May, from 52.3 flash and up from 50.8 in April (second best print of the year)

ISM Services tumbled to 49.9 in May, from 51.6 (and well below the expectation of 52.0) – lowest since June 2024

So more baffle ’em with bullshit…

Source: Bloomberg

In May, private sector output growth accelerated sharply from April’s 19-month low.

Higher activity was driven by an upturn in the services economy as manufacturing output fell marginally again.

The S&P Global US Composite PMI® recorded 53.0 in May, up from 50.6 in the previous month – leading all the other major global economies.

Source: Bloomberg

“Service sector growth has improved more than first estimated in May, with confidence about the year ahead also lifting higher, buoyed in part due to pauses on higher rate tariffs. Companies have matched that optimism with increased spending and hiring,” according to Chris Williamson, Chief Business Economist at S&P Global Market Intelligence.

“That said, the improvements come from a low base, following a very gloomy April, which saw growth nearly stall as confidence sank to a two-and-half year low. Reports from companies underscore how uncertainty about the policy outlook continued to act as a deterrent to expansion plans in May. Output growth and confidence consequently remain subdued by standards seen last year.

“The PMI is so far indicating annualized GDP growth barely above 1% in the second quarter, so avoiding recession but adding to our expectation of only modest GDP growth in 2025 of just 1.3%.”

However, as Williamson concludes, the stench of stagflation remains:

“Alongside sluggish economic growth, the survey is also signaling intensifying inflationary pressures. Rising costs in the service sector were again blamed widely on tariffs, which were in turn passed on to customers to result in the steepest rise in average prices charged since August 2022.

These rising price pressures will only add to policymaker reluctance to reduce interest rates, which we consequently expect to remain on hold until December.”

So, you decide: ISM Manufacturing UGLY, ISM Services UGLY; Manufacturing PMI STRONG, Services PMI STRONG!