Global trade conditions remain subdued in May despite stock building efforts among goods producers

The worldwide Purchasing Managers' Index (PMI) surveys compiled by S&P Global Market Intelligence indicated that global trade conditions further deteriorated midway through the second quarter of 2025, as the impact of additional US tariffs, announced at the start of April, continued to dampen export performance.

The seasonally adjusted Global PMI New Export Orders Index, sponsored by JPMorgan and compiled by S&P Global, rose to 48.0 in May, up from 47.5 in April. Posting below the 50.0 neutral mark for a second consecutive month, the latest reading indicated that trade activity contracted modestly again. Despite easing since April, the rate of decline was the second-fastest in the past 20 months, reflecting still-subdued trade performance.

Manufacturing trade contraction eases while services deepen

The manufacturing sector's export contraction persisted in May, albeit at a slower pace compared to April, when higher US tariffs had been announced. That said, the pace at which goods export orders fell was among the fastest in recent months, reflecting a backdrop of softening manufacturing sector conditions: the PMI's forward-looking new orders index signalled weakening global demand, registering the sharpest reduction in new work at factories since last October.

While stock building efforts at manufacturers (notably in the US) had helped to alleviate the fall in export orders in May, as seen via the first rise in global stocks of purchases in just over two-and-a-half years, it is uncertain how much longer the front-loading of goods orders ahead of higher US tariff implementation will last, posing a downside risk to output and trade flows in the months ahead.

The good news was a pick-up in manufacturers' confidence in May from April's low following the announcement of US tariffs on April 2nd. Optimism among global goods producers improved for the first time in three months. Hopes for better global trade conditions and less uncertainty reportedly drove the pickup in sentiment. This was amidst reports of talks between US and key trading partners, though global goods producers continued to recognise that uncertainty prevails, leading to confidence levels remaining below-average in May.

Meanwhile services exports contracted for a second straight month in May, dropping at the fastest rate since November 2022. The latest downturn in services export business was again to a large degree attributed to the spillover of recent US policy developments, as the wider non-export service sector continued to grow, with quicker expansions recorded across both measures of services activity and new business. Similar to the trend for manufacturing, services business confidence improved for the first time in three months, which was a positive sign to suggest that peak-pessimism may have passed.

Detailed sector PMI revealed that service sectors, namely insurance and software & services, led in terms of global export growth in May. The real estate and metals & mining sectors notably saw the sharpest downturns, both recording steep reductions in exports over the latest survey period.

Emerging market lead the decline in trade for the first time in three years

Regionally, May's PMI data alluded to another month of broad-based deterioration in trade conditions but was led by emerging markets for the first time since May 2022.

An acceleration of the reduction in goods export orders coupled with a renewed downturn in services export business contributed to the fastest fall in emerging market exports since December 2022. While front-loading of goods orders had helped to cushion the fall in export demand for emerging markets in April, May reflected a more prominent role of rising trade barriers in dampening exports, notably from mainland China. This has similarly spread to trade-related services among emerging economies, resulting in the first reduction in services export business in 16 months.

Meanwhile developed economies saw export orders deteriorate at a more modest pace in May, though this was largely underpinned by an alleviation of conditions in the US. After falling at a solid pace in April, US export orders contracted only marginally amidst renewed goods exports growth. The improvement in US goods export conditions supported the slower fall in in developed markets goods exports, all while services trade continued to fall at a rate largely unchanged since April.

Only India and US record higher goods exports among the top ten

The number of top ten trading economies reporting higher goods exports rose from one to two in May, with the US joining India in expansion territory. That said, the rate at which US goods exports rose was only marginal, paling in comparison with overall US new orders growth, which was buoyed by unprecedented inventory build-up amid tariff worries. India meanwhile saw another sharp rise in export orders for goods in May, but the rate of expansion eased in tandem with overall new orders.

On the other hand, Canada and the UK led the downturn in goods trade with especially sharp reductions in export orders, even though the rates of decline eased in both cases compared to April. Tariffs and elevated trade uncertainty remained the key dampener for export performance for both Canada and the UK according to comments from survey contributors.

More moderate rates of contraction in export orders were observed for mainland China and Japan, the former notably falling at the quickest pace in nearly two years. Finally, marginal rates of reduction were observed for the remaining economies - South Korea, Brazil, EU and Russia.

Access the latest global PMI press release here.

Jingyi Pan, Economics Associate Director, S&P Global Market Intelligence

jingyi.pan@spglobal.com

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Purchasing Managers' Index™ (PMI^®) data are compiled by S&P Global for more than 40 economies worldwide. The monthly data are derived from surveys of senior executives at private sector companies, and are available only via subscription. The PMI dataset features a headline number, which indicates the overall health of an economy, and sub-indices, which provide insights into other key economic drivers such as GDP, inflation, exports, capacity utilization, employment and inventories. The PMI data are used by financial and corporate professionals to better understand where economies and markets are headed, and to uncover opportunities.

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