Two the Point — Uncovering Strength in a Shifting Market

Despite recent manufacturing contractions and market volatility, positive employment signals and global manufacturing expansion suggest underlying economic strength and potential for continued growth in the current bull market.

• U.S. Manufacturing Contraction: The ISM Manufacturing PMI fell to 48.7 in May, marking the second consecutive month of contraction, falling short of the 49.8 forecast, and spurring recession concerns.
• Positive Employment Signal: Despite overall contraction, the ISM employment index rose to 51.1, showing growth for the first time in eight months and indicating underlying strength in the manufacturing sector.
• S&P Global U.S. PMI: Contrasting the ISM data, the S&P Global U.S. Manufacturing PMI showed expansion in May, with the employment index reaching its highest level since July 2023.
• Global Manufacturing Expansion: The Global Manufacturing PMI recorded 50.9 in April, showing four months of consecutive growth and the fastest rate since July 2022.
• Broad-based Output Growth: Global manufacturing output growth accelerated, led by robust performance in Asia, particularly in India, South Korea, and Taiwan, along with significant gains in the U.S. and U.K.
• Inventory Rebuilding: Companies are replenishing inventories, driving new orders for goods at the fastest rate in 26 months, and reviving global goods trade, which has seen rising exports for two consecutive months.
• Bull Market Prospects: Despite recent volatility, the current bull market, which began in October 2022, has delivered a 53% gain over 20 months. Historical patterns suggest the potential for further growth, with median bull markets lasting about 30 months and achieving 90% gains on average over the past 100 years.