Bloomberg
The numbers: The flash IHS Markit U.S. manufacturing purchasing managers index inched up to 56.6 this months from 56.5 in April and touched the highest level since September 2014. Readings over 50 indicate expansion.
A similar survey of service-oriented businesses that employ most Americans also rose. It climbed to 55.7 from 54.6 in April. This is a 3-month high.
A flash reading is typically based on approximately 85%-90% of responses each month.
What happened: May data showed strong gains in manufacturing production and new business. There were signs that manufacturers intend to boost production schedules in the coming months. In the service sector, there was a slight slowdown in new business but the backlogs of work was the strongest since March 2015.
Inflation pressures were evident in the data and input costs measured across both manufacturing and services are rising at the fastest rate in nearly five years.
Big picture: The data is consistent with roughly 3.5% domestic demand growth, economists said, and adds to a sense that the slowdown in gross domestic product in the first quarter was simply a pause. Business optimism is at three-year high. Service firms said they were under pressure to hire additional staff.
What are they saying?: “The flash May PMI surveys point to an encouragingly solid pace of economic growth of 2.5%-3%, with monthly job gains running at just over 200,000,” said Chris Williamson, chief business economist at IHS Markit.
Market reaction: Stocks opened lower as investors fret over trade, geopolitics. The Dow Jones Industrial Average were down 62 points to 24,772