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Australia’s S&P Global Manufacturing PMI eased to 50.7 in May from 51.3 in April, with new orders falling at the steepest pace since October and selling price inflation hitting a 45-month high.

Summary:

• The S&P Global Australia Manufacturing PMI fell to 50.7 in May from 51.3 in April, remaining above the 50.0 no-change threshold, per S&P Global
• New orders declined for a third consecutive month in May and at the steepest pace since October 2025, with respondents citing squeezed client budgets and muted demand driven by sharp price rises, per S&P Global
• Selling price inflation reached a 45-month high in May, while input cost inflation was the second-fastest in nearly four years, with higher fuel and transportation costs widely cited, per S&P Global
• Supplier delivery times lengthened to the second-largest degree in 46 months, driven by higher fuel costs and widespread international shipping delays linked to the Middle East war, per S&P Global
• Manufacturing output fell for a fourth consecutive month in May, albeit at a softer pace than April, per S&P Global
• Employment increased marginally in May, the first rise in three months, though S&P Global Economics Director Andrew Harker cautioned the gain was unlikely to be sustained if new orders continued to fall
• S&P Global warned that based on historical PMI relationships, official data risks showing a fall in manufacturing production across the second quarter unless conditions improve markedly in June, per S&P Global

Australia’s manufacturing sector held above the expansion threshold in May but only narrowly, and the details of the latest S&P Global survey paint a significantly more troubled picture than the headline reading suggests, with new orders falling at their fastest pace in seven months and cost pressures escalating to multi-year highs driven by the ongoing war in the Middle East.

• S&P Global Australia Manufacturing PMI, May 2026: 50.7
  • prior: 51.3

The headline PMI was heavily influenced by a sharp lengthening of supplier delivery times, an index that is inverted in the PMI calculation on the basis that longer lead times typically reflect demand-driven capacity pressure. In May’s case the lengthening reflected war-related supply disruption and shipping delays rather than any underlying demand strength, meaning the true operating conditions facing Australian manufacturers were considerably weaker than the 50.7 reading implies.

New orders contracted for a third consecutive month in May and at the steepest pace since October 2025. Firms attributed the decline to client budgets squeezed by sustained price rises and broadly muted demand. New export orders also fell at a solid pace, with several respondents pointing to softness from Asian markets as a specific drag. The order weakness fed through to output, which declined for a fourth straight month, though the pace of contraction eased compared with April.

Cost pressures remain the dominant theme. Input cost inflation was the second-fastest recorded in nearly four years, with higher fuel prices cited across the survey as the primary driver. Transportation costs also rose sharply, reflecting war-linked disruption to international shipping routes. Selling price inflation accelerated further and reached its highest level in 45 months, as manufacturers passed rising costs through to customers, itself a factor further dampening new order volumes in a feedback loop that risks becoming self-reinforcing.

Supplier delivery times lengthened to the second-largest degree in 46 months, a direct reflection of the ongoing disruption to global supply chains caused by the conflict in the Middle East and the effective closure of the Strait of Hormuz since late February. Input buying and stocks of purchases both fell in May following a brief increase the prior month, as firms aligned procurement with lower output requirements. Finished goods inventories also declined.

Employment provided the one clear positive signal in the survey, rising marginally in May after three months of decline. Firms indicated the hiring reflected efforts to accelerate production lines and prepare for anticipated future projects. With employment rising at a time of falling orders, backlogs of work were depleted at a solid and accelerating pace, suggesting the near-term pipeline of committed work is thinning.

Business confidence remained subdued overall, with war-related uncertainty and the demand-dampening effect of higher prices weighing on the outlook. Optimism edged up from April, however, with firms expressing cautious hope for an improvement in new orders over the coming year.

Andrew Harker, Economics Director at S&P Global Market Intelligence, noted that familiar war-driven themes continued to dominate the survey and that firms were finding it increasingly difficult to secure new business as a result. He warned that based on historical relationships between the PMI readings and official production data, Australia faces a real prospect of recorded manufacturing output contracting in the second quarter of 2026 unless June delivers a marked improvement.

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The headline number staying above 50 flatters what is a deteriorating picture beneath the surface: the PMI is being propped up by inverted supplier delivery times, which reflect war-related supply disruption rather than genuine demand strength. For the RBA, the combination of a 45-month high in selling price inflation and a four-consecutive-month slide in output will deepen the stagflationary read on the Australian manufacturing sector, complicating any near-term easing calculus. The second-largest lengthening of lead times in 46 months points directly at Hormuz-linked shipping disruption as the dominant transmission mechanism, meaning Australian factory conditions are unlikely to improve materially until the strait situation resolves. S&P Global’s own economists flagged that historical PMI relationships point toward an official contraction in manufacturing production in Q2 unless June delivers a sharp reversal.

This article was written by Eamonn Sheridan at investinglive.com.

Iranian President Pezeshkian has resigned (media sources), telling Supreme Leader Khamenei the IRGC had seized control of all major decisions and rendered elected civilian government unworkable.

• Oil is higher on Globex to open the new week.

Treat this report with care, social media sources only at this stage. Iran’s government has denied it as ‘fake news’.

Summary:

• Iranian President Masoud Pezeshkian resigned and addressed a direct communication to Supreme Leader Ali Khamenei stating that the Islamic Revolutionary Guard Corps had assumed control of all major decision-making, per the source material
• Pezeshkian stated he had been excluded from every significant decision and said he could not continue to govern under those conditions, per the source material
• The resignation amounts to a formal admission by Iran’s elected head of government that civilian authority is subordinate to IRGC command, per the source material
• The development directly undermines the ongoing US-Iran negotiations, as Washington has been engaging with a civilian government whose own president has now declared it lacks effective power, per the source material

Iranian President Masoud Pezeshkian resigned and delivered a direct written communication to Supreme Leader Ali Khamenei confirming what outside observers and intelligence assessments had long suggested: the Islamic Revolutionary Guard Corps has assumed effective control of Iran’s government, and the elected civilian presidency has been reduced to a ceremonial function with no meaningful role in major decisions.

Pezeshkian told Khamenei he had been cut out of every significant decision, that the IRGC had consolidated authority across the institutions of state, and that he was unable to continue governing under conditions in which the presidency carried responsibility without power. The resignation was both a political act and a public indictment, issued at a moment when Iran is engaged in the most consequential diplomatic negotiations in a generation.

The timing is devastating for the nuclear talks. The United States and Iran had been working through a tentative framework, reported late last week, that would extend the ceasefire, begin to reopen the Strait of Hormuz, and launch a structured 60-day negotiation on Tehran’s nuclear program and enriched uranium stockpile. That framework was already fragile: Trump had toughened its terms on Sunday, Iran’s parliamentary security spokesman had declared no nuclear commitments had been made, and Foreign Minister Abbas Araqchi had urged patience while declining to offer any timeline for resolution.

Pezeshkian’s resignation now raises a more fundamental problem than the terms of any deal. Washington has been negotiating with a government whose own president has formally stated it holds no real authority. If the IRGC controls all major decisions, as Pezeshkian has now alleged in a direct communication to the supreme leader, then any agreement signed by Iran’s foreign ministry or presidency carries an obvious question mark over whether the institution with actual military and strategic power has endorsed it, and whether it would honour the terms.

The IRGC’s centrality to Iran’s posture on Hormuz is not incidental. The corps controls the missile and drone forces that have enforced Tehran’s claim over the waterway since the conflict began in late February. It runs the naval assets that have threatened commercial shipping on the Iranian coastal route. If Pezeshkian’s account is accurate, the organisation that physically controls the strait has been operating independently of the president throughout the negotiations, and the civilian interlocutors across the table from American diplomats have been speaking without a mandate from the body that would need to implement any deal.

For energy markets, the resignation removes the most optimistic scenario from the table in the near term. A rapid diplomatic resolution to the Hormuz closure was already a low-probability outcome given the gap between US and Iranian positions on uranium stockpiles, sanctions relief and the blockade. It is now harder still to identify a credible Iranian signatory for any framework, or a mechanism by which a deal reached with civilian officials could compel IRGC compliance. The strait, through which a fifth of the world’s oil and a significant share of its natural gas flowed before the conflict, remains effectively closed to normal commercial traffic, with US Central Command coordinating a covert trickle of around three dark-passage crossings per day, a volume that does not begin to approach pre-war norms.

The question now facing Washington, and the oil market, is whether the IRGC will step into the diplomatic space Pezeshkian has vacated, or whether his resignation marks the end of the negotiating track entirely.

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This is an unambiguous oil price shock event. The resignation strips the already fragile US-Iran negotiating framework of its last pretence of a functional civilian counterpart, and markets will reprice Hormuz closure risk sharply higher at the open. Any probability assigned to a near-term deal reopening the strait should be revised toward zero until it becomes clear whether the IRGC intends to engage diplomatically at all, or whether Pezeshkian’s departure removes the last internal advocate for a negotiated settlement. The admission that the elected president has been excluded from every major decision also raises the question of who in Tehran actually has authority to sign or honour any agreement, a question Washington now has to answer publicly. Energy traders will read this as weeks, not days, added to the Hormuz timeline.

This article was written by Eamonn Sheridan at investinglive.com.

• Unemployment change -12k vs 10k expected
• Prior 20k
• Unemployment rate 6.3% vs 6.4% expected
• Prior 6.4%

The jobless figure shows a drop of 12,000 and that brings the overall unadjusted number of unemployed persons to 2.95 million. That being said, this likely should be a one-off and doesn’t excuse the fact that the labour market picture has been softening in recent months.

The unemployment rate held steady for most of 2025 but the broader trend reflects a decline since 2023. And that fits with weakening economic conditions in Europe’s largest economy as well, especially in the industry sector. And with the US-Iran conflict now, things look set to continue down that path again potentially.

The German labour office notes that “despite a decline in unemployment, the spring upturn has not really gained momentum this year”.

This article was written by Justin Low at investinglive.com.

Iran’s parliament security spokesman says no nuclear commitments have been made to the US, as the foreign minister confirms talks are ongoing but urges patience over premature judgements.

Summary:

• Iran’s parliamentary national security committee spokesman Ebrahim Rezaei said on Sunday that Iran has made no nuclear commitments to the United States, according to state media
• Rezaei warned that the US must choose between Iranian diplomats or Iranian missiles, per state media reports
• Foreign Minister Abbas Araqchi told state media separately that message exchanges and talks with the US are continuing
• Araqchi cautioned against drawing conclusions from the process, saying outcomes cannot be judged until a clear result is reached, per state media
• The foreign minister advised against giving weight to speculation circulating around the talks

Iran’s government sent a fractured diplomatic signal on Sunday, with a senior parliamentary official flatly denying any nuclear commitments to Washington while the country’s foreign minister insisted that dialogue with the United States remained very much alive.

Ebrahim Rezaei, spokesman for Iran’s parliamentary national security committee, said in blunt terms that Tehran had made no nuclear pledges to the US side, and framed the choice before Washington in stark terms: engage Iranian diplomats, or face Iranian missiles. The remarks stand as the most direct parliamentary pushback yet against speculation that this week’s tentative ceasefire extension framework had set the stage for rapid progress on the nuclear file.

Foreign Minister Abbas Araqchi offered a more measured tone in separate comments to state media, confirming that message exchanges and talks with the United States were continuing. He urged against reading too much into the current state of the process, saying neither optimism nor pessimism was warranted until a concrete outcome emerged, and dismissed circulating speculation as a distraction from the substance of the negotiations.

The divergence between the two statements reflects an internal tension that has run through Iranian diplomacy since the February conflict began. Hardliners in parliament have consistently framed any nuclear concession as a capitulation, while the foreign ministry has sought to project controlled engagement without foreclosing a deal.

The backdrop to Sunday’s remarks is a tentative agreement, reported late last week, under which US and Iranian negotiators drafted a memorandum of understanding that would reopen the Strait of Hormuz, lift the US blockade on Iranian ports, and launch a 60-day structured negotiation on Tehran’s nuclear program, including the fate of its stockpile of highly enriched uranium. Neither US President Donald Trump nor Iran’s supreme leader had publicly endorsed the document as of Sunday, and both sides described it as a work in progress.

The nuclear question has been the central sticking point throughout the post-conflict diplomacy. Washington has insisted Iran give up its enriched uranium stockpile without receiving sanctions relief in return, a position Tehran has resisted since direct talks opened in Muscat in February. Iran has equally rejected any framework that does not address the ongoing US blockade and the lifting of economic sanctions as part of a first-phase settlement.

For oil markets, the risk premium built into crude since the Strait of Hormuz was effectively closed in late February has shown little sign of unwinding. Distillate inventories have fallen to multi-decade lows and shipping costs remain elevated as long as both blockades remain in place. Sunday’s parliamentary comments are unlikely to help. Until Tehran’s supreme leadership and Washington’s presidency align behind a common text, the strait stays contested and the supply disruption continues to set the floor beneath global energy prices.

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The hardline parliamentary statement pushes back directly against any market optimism generated by Thursday’s tentative ceasefire extension framework, which had lifted hopes for a rapid resolution to the Strait of Hormuz standoff. Oil prices remain sensitive to any signal that nuclear talks could collapse or stall, given that neither side has lifted its blockade and the strait remains constrained. The foreign minister’s call to avoid judging the process prematurely will do little to ease uncertainty among energy traders watching for a breakthrough that would ease supply restrictions. Until both supreme-leader and presidential sign-off materialise on the US side, and Tehran delivers a concrete counter-position on enriched uranium, the risk premium baked into crude is unlikely to unwind in any meaningful way.

This article was written by Eamonn Sheridan at investinglive.com.

China’s official manufacturing PMI slipped to 50.0 in May from 50.3, matching forecasts, as export orders contracted sharply; the non-manufacturing PMI rose to 50.1, beating the 49.5 consensus.

Summary:

• China’s NBS Manufacturing PMI fell to 50.0 in May from 50.3 in April, matching the Reuters poll forecast of 50.0, according to the National Bureau of Statistics
• The result was the lowest reading in three months, per NBS data
• New export orders declined to 48.6 from 50.3 in April, with analysts at the China Logistics Information Center attributing the drop primarily to contraction in consumer goods exports
• The raw material purchase price sub-index eased to 60.5 from 63.7 in April but remained well above the 50-point threshold, per NBS data
• High-tech and equipment manufacturing outperformed, posting PMI readings of 52.9 and 52.1 respectively, while high-energy-consuming industries contracted, per NBS
• The NBS Non-Manufacturing PMI rose to 50.1 in May from 49.4 in April, beating the 49.5 forecast, with the services gauge reaching a nine-month high of 50.3, per NBS data

China’s factory sector stalled in May as contracting export orders and persistent cost pressures pushed the official manufacturing purchasing managers’ index to its lowest level in three months, adding to signs that the world’s second-largest economy is struggling to maintain industrial momentum.

The NBS Manufacturing PMI for May came in at 50.0, down from 50.3 in April and matching the Reuters consensus forecast. The reading sits precisely on the threshold dividing expansion from contraction.

• NBS Manufacturing PMI, May 2026: 50.0
  • expected: 50.0
  • prior: 50.3
• NBS Non-Manufacturing PMI, May 2026: 50.1
  • expected: 49.5
  • prior: 49.4

Composite PMI May, 50.5. Third straight month of growth in overall business activity.

• prior 50.1

Within the manufacturing survey, the production sub-index held at 51.2 while new orders slipped to 49.9, reflecting the divergence between supply-side capacity and softening demand. New export orders deteriorated more sharply, falling to 48.6 from 50.3 in April, the clearest sign that global demand headwinds are beginning to feed through to the factory floor. Analysts at the China Logistics Information Center attributed the decline primarily to a marked contraction in consumer goods exports.

Input cost pressures remained a complicating factor. The raw material purchase price index eased to 60.5 from 63.7 in April but stayed well above the expansionary threshold, reflecting the ongoing impact of elevated global energy costs. The effective closure of the Strait of Hormuz since late February has sent energy prices surging, with petrochemical producers and other upstream industries absorbing the brunt of imported inflation. Some demand-side distortion has also emerged, with buyers stockpiling materials in anticipation of further cost increases.

The picture was not uniformly negative. High-tech manufacturing posted a PMI of 52.9 in May, and equipment manufacturing came in at 52.1, both comfortably in expansion territory. Global appetite for semiconductors and AI-related components has provided a degree of insulation for advanced manufacturers even as the broader sector softens. Energy-intensive industries, by contrast, contracted.

The non-manufacturing PMI offered the clearest bright spot, rising to 50.1 from 49.4 in April and beating the 49.5 forecast. The services activity gauge climbed to 50.3, a nine-month high, partly reflecting a surge in travel and leisure spending during the five-day May Day holiday. Construction activity also contributed to the improvement.

China’s government has set a more modest GDP growth target for 2026, creating space for structural reform, but the pressure on policymakers to stimulate domestic consumption remains acute. A mid-May summit between Chinese and US leaders in Beijing yielded no extension of the bilateral trade truce reached late last year, though both sides agreed to explore tariff reductions on goods worth roughly $30 billion each. The absence of a renewed trade framework, combined with weakening consumer goods exports and elevated input costs, leaves manufacturers with little near-term relief on either the demand or cost side of the ledger.

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A manufacturing PMI reading right on the expansion/contraction boundary reinforces the case for further Chinese policy easing, which commodity markets will read as a medium-term demand support signal even as near-term factory output softens. The sharp drop in new export orders to 48.6 from 50.3 in April is the more unsettling figure for industrial metals and energy demand: if consumer goods manufacturing contracts further, upstream raw material appetite will follow. Raw material input prices remained elevated at 60.5 despite easing from April’s 63.7, keeping margin pressure on petrochemical and energy-intensive producers, a dynamic that amplifies the squeeze already running through the sector from elevated Hormuz-linked energy costs. The services PMI recovery to 50.1 is unlikely to offset that industrial softness for oil demand watchers.

This article was written by Eamonn Sheridan at investinglive.com.

Former Federal Reserve Chair Powell has stayed on at the Bank as one of the members of the Board of Governors. He said he’ll be keeping a low profile. I can’t find any details on the venue, topic etc. Maybe that’s all part of the low profile? I’ll keep an ear to the ground at 0030 GMT.

This article was written by Eamonn Sheridan at investinglive.com.