Developed world economic growth gains momentum in May. The flash data from S&P Global shows an acceleration in economic growth across the four major developed economies (G4). The combined manufacturing and service sectors reached their fastest growth rate in a year. Inflation pressures eased to one of the lowest levels in over three years, but remained high by pre-pandemic standards.
Economic growth in May increased across all four largest developed economies, with the GDP-weighted average PMI Output Index rising from 51 in April to 52, marking the highest rate in a year. This improvement was driven by the service sector, which saw its sharpest growth in a year, while manufacturing showed the first significant increase in two years.
The US recorded the strongest expansion, with output rising at the highest rate in over two years. The service sector saw a 12-month high in growth, and manufacturing experienced the largest output increase in 13 months. The Eurozone and Japan also reported increased growth rates, while UK growth slowed slightly but remained strong.
G4 future output expectations improved in May, leading to increased employment rates in the Eurozone and Japan. However, employment fell in the US for the second consecutive month, while UK job growth remained muted.
Inflation rates showed mixed results, with the Eurozone experiencing the slowest increase, while the US, UK, and Japan saw slight cooling in inflation rates. Despite this, inflation remained high compared to pre-pandemic levels, particularly in the manufacturing sector.
