Non-oil PMI ticks up to 47.1 in May, but selling-price inflation surges

Our non-oil private sector saw a modest pickup in May activity — but selling-price inflation surged to its second-highest reading in the survey’s history, confirming that the cost restraint of March and April was unsustainable, S&P Global Market Intelligence's David Owen says in S&P Global’s latest report (pdf). The headline PMI reading nudged up to 47.1 from April's 37-month low of 46.6 — a fifth straight month below the 50.0 growth threshold.

The input cost picture got worse, not better. Prices surged at their fastest pace since January 2023 on more expensive diesel and electricity, a weaker EGP, and the sharpest wage pressures since early 2018. Nearly half of all surveyed businesses reported rising costs.

“The principal move was an historic surge in selling charges, with the rate of output price inflation reaching its second-highest in the survey's history,” Owen notes. New orders fell for the fifth straight month as inflation-wary customers kept their wallets shut. Output shrank sharply in wholesale, retail, and services, with only manufacturing and construction showing slight signs of a rebound.

Firms are bracing for more. Companies are hoarding inventories at the fastest rate in almost three years as a hedge against future price hikes. Supply chain disruptions also lengthened delivery times at the fastest pace in nearly four years.

Jobs are the casualty. Firms shed positions at the fastest pace since June 2020, actively laying off workers and leaving vacant roles unfilled.

Why it matters: The reading points to a softer 2Q 2026 GDP figure, with the Middle East conflict likely to depress near-term expansion, Owen says.

What’s next: Business confidence jumped to its highest level since August 2024, with firms banking on an end to regional disruptions to improve broader conditions and stabilize the EGP.