Investing.com -- Growth in U.S. business activity touched a 13-month high in May as a jump in services activity helped offset weakness in the manufacturing sector, according to new data on Tuesday.
S&P Global's flash U.S. composite purchasing managers' index rose to 54.5 during the month, up from 53.4 in April. It was the sharpest in the reading increase since April 2022, and topped economists' forecasts of 50.0.
A level above 50 denotes expansion.
Leading the surge was the services industry, where the rate of growth was the fastest for just over a year thanks to a spike in demand that has allowed these companies to raise prices in a bid to counter "historically elevated" inflationary pressures. New business from abroad was particularly strong, with export orders growing for the first time in a year.
But manufacturing saw operating conditions deteriorate, S&P Global noted. New orders slid by their quickest pace in three months, in a sign that demand was continuing its recent post-pandemic transfer into services.
“The inflation picture is [....] changing. Whereras manufacturing prices spiked higher during the pandemic due to strong demand and deteriorating supply, it is now the service sector’s turn to be hiking prices amid resurgent demand and an inability to cope with order inflows due to a lack of capacity," said S&P Global Chief Business Economist Chris Williamson in a statement.