The global economy continues to boom, according to May business surveys. JP Morgan’s all-industry manufacturing PMI jumped to a new high last month, with continued gains in manufacturing alongside an impressive surge in service sector activity. 

The strength of the surveys is broad-based, but more recently they have been led by the U.S. and Europe, while lagging behind in much of the emerging markets where vaccination rates have risen slowly. 

The strength of manufacturing PMIs is broadly based across all sectors. More than 80% of countries have an average manufacturing PMI above 2010–19 levels, while the breadth of strength in the services sector now stands at over 70%%. Despite this breadth, divergences continued to widen. The surge in May’s surveys is partly offset by the massive gain in the U.S. and the underperformance in much of the emerging markets. Even so, the substantial improvements in Europe are a positive sign that the pandemic’s second-wave fallout is rapidly fading.

At the regional level, the strength of the May services PMI survey was also uneven. The services PMI declined in Asia last month, while it rose elsewhere. The most impressive gains were seen in the U.S. and the eurozone, where the PMI jumped by about five points. The U.S. PMI ended at 70.1 and the eurozone index at 55.2. Japan and India were at the bottom of the range with declines in May that brought the level to 46 in both economies. China’s PMI fell 1.2 points to 55.1. Despite national and regional divergences in May’s changes, the breadth of the strong readings remains impressive, with 70–80% of all countries recording production readings above their 2010–19 averages.

With signs of strong inflows of new orders across all sectors and low inventories in the manufacturing sector, there is considerable support for the view that this is only the beginning of the post-second-wave boom. Bottleneck pressures continue to mount, and price indicators rose further in May, reaching unprecedented levels.