S&P manufacturing output reaches 49-month high on AI infrastructure

The S&P Global US Flash Purchasing Manager’s Index report released May 21 shows manufacturing for AI data center equipment booming. The report lists the U.S. Manufacturing Output index for May at 56.2%, a 0.2 gain from April, and the U.S. Manufacturing PMI at 55.3%, a 0.8 gain from last month. A close look at top-performing companies shows strong investments and production of goods in demand for use in AI data centers.

Another factor driving strong manufacturing demand is uncertainty related to the U.S.-Israel war in Iran. In comments on the report, Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, noted the conflict is exerting negative pressure on the general Business Activity index, which fell by 0.1 to 50.9%, indicating very slow growth, but the report itself noted that increasing domestic book orders for manufacturing goods are “due to precautionary stock building by clients,” and that export orders are falling.

According to reporting from Benzinga, many of the manufacturers currently enjoying increased output and stock prices are seeing growth related to AI data center infrastructure. The stock-trading news and research site noted that publicly-traded companies like Caterpillar Inc., Cummins Inc., and Vertiv Holdings are seeing growth related to natural-gas generators, medium-voltage switchgear, and liquid-cooling equipment.

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“Manufacturing output meanwhile rose at the fastest rate for just over four years, the rate of growth accelerating from the already-robust pace seen in April,” read the S&P Global Report, on positive manufacturing numbers. “However, an accompanying marked influx of new orders for goods in part again reflected precautionary stock building by clients. Order book growth in manufacturing was also purely domestically driven, with goods exports falling again.”

“The damaging economic impact from the war in the Middle East is becoming increasingly evident in the business surveys,” said Chris Williamson, Chief Business Economist at S&P Global Market Intelligence. “The ‘flash’ PMI data for May recorded only modest growth of business activity as demand was again squeezed by a further spike in prices and jobs were cut as firms worried over rising costs and the economic outlook.

Investments in data center infrastructure

Intermountain Electronics to expand Illinois facility
The expansion will increase the plant’s production of power distribution units for renewable energy sources.

ABB to spend $200 million on medium-voltage components in Europe
In March, the Swiss industrial company said it would spend $120 on a similar push in the United States.

Eaton to open new $30 million Nebraska switchgear factory
The power management company said the plant would be needed to meet demand from AI data centers.