US S&P Global PMI expected to show resilient business activity in May
- The S&P Global flash PMIs for May are expected to show a modest expansion.
- The employment and inflation sub-indices continue to gain relevance in the current context.
- EUR/USD has little room to recover even if PMIs miss expectations.
S&P Global will release the May flash Purchasing Managers' Indices (PMIs) for most major economies, including the United States (US), on Thursday. These surveys of top private sector executives are seen as an early indicator of the country’s economic health.
Market participants anticipate that the Global Services PMI will print at 51, matching the April reading, while Global Manufacturing output is expected to print at 54, slightly below the previous month's 54.5 reading. The Composite PMI, a combination of manufacturing and services data, stood at 51.7 in April.
S&P Global separately reports manufacturing activity and services activity through the Manufacturing PMI and the Services PMI. Additionally, they present a weighted combination of the two, the Composite PMI. Generally speaking, a reading of 50 or more indicates expansion, while readings below the threshold indicate contraction.
The report has two versions, a preliminary estimate and a final revision, which comes around two weeks later. These preliminary versions or flash estimates tend to have a broader impact on the US Dollar (USD).
What can we expect from the next S&P Global PMI report?
Ahead of the announcement, the USD holds on to substantial weekly gains, with the latest inflation data pointing to upcoming interest rate hikes. Overheating inflation, driven by the war in the Middle East, has established a new framework for central banks. The Federal Reserve (Fed) was expected to cut interest rates before the Iran war started, but as the conflict drags on, speculative interest has lifted bets on the central bank moving in the opposite direction.
The anticipated figures are expected to show that economic expansion continues at a moderate pace, which will likely help maintain the USD on a bullish path. Still, investors will be looking for additional clues in the employment and inflation sub-readings, both of which hint at how the Fed may react when it meets in June. A scenario in which mounting price pressures couple with a tight labor market would further support the case of upcoming rate hikes.
Higher rates have two immediate consequences. One, they would generate political turmoil, given US President Donald Trump’s continued pressure for lower rates. Two, it will also translate into higher borrowing costs, which means companies would be less willing to invest, hence slowing growth.
In the case of better-than-anticipated figures, the scenario will be pretty much the same: a bullish Greenback, supported by solid local data. A miss in PMIs, and worse, any reading below the 50 threshold, could put the USD under selling pressure. Still, the slide could well be short-lived, as demand for the safe-haven Greenback and bets of Fed’s hike are unlikely to be affected by the S&P Global report.
When will the May flash US S&P Global PMIs will be released and how could they affect EUR/USD?
The S&P Global Manufacturing, Services, and Composite PMIs reports will be released at 13:45 GMT on Thursday, and as previously noted, are expected to show that US business activity continued to expand in May.
Valeria Bednarik, FXStreet Chief Analyst, notes: “The EUR/USD pair struggles to recover above the 1.1600 mark, trading near a fresh multi-week low in the 1.1580 region. The USD pared its advance as Oil prices eased from weekly tops, hinting at reduced concerns about Middle East developments, but remains strong as the conflict seems far from over.”
Bednarik adds: “War headlines are likely to continue overshadowing macroeconomic releases, with the latest likely to have a temporary impact on price action. As for the EUR/USD pair, it is technically bearish. The daily chart shows that the Momentum indicator gains downward momentum below its midline, while the Relative Strength Index (RSI) indicator remains flat in oversold territory. At the same time, EUR/USD develops below all its moving averages, with the 20 Simple Moving Average (SMA) heading south while providing dynamic resistance around 1.1620. Gains beyond it could open the door for an advance towards the 1.1660 area, where sellers are likely to return.”
Finally, Bednarik notes: “A downward extension below recent lows in the 1.1580 region could favor a test of the 1.1530 area, while further slides expose a long-term static support area around 1.1470.”
Fed FAQs
Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.
The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions. The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.
In extreme situations, the Federal Reserve may resort to a policy named Quantitative Easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.
Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.
Economic Indicator
S&P Global Services PMI
The S&P Global Services Purchasing Managers Index (PMI), released on a monthly basis, is a leading indicator gauging business activity in the US services sector. As the services sector dominates a large part of the economy, the Services PMI is an important indicator gauging the state of overall economic conditions. The data is derived from surveys of senior executives at private-sector companies from the services sector. Survey responses reflect the change, if any, in the current month compared to the previous month and can anticipate changing trends in official data series such as Gross Domestic Product (GDP), industrial production, employment and inflation. A reading above 50 indicates that the services economy is generally expanding, a bullish sign for the US Dollar (USD). Meanwhile, a reading below 50 signals that activity among service providers is generally declining, which is seen as bearish for USD.
Read more.Next release: Thu May 21, 2026 13:45 (Prel)
Frequency: Monthly
Consensus: 51
Previous: 51
Source: S&P Global
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