Economic Report: IHS Markit says latest PMI data indicate rate of collapse in U.S. economy peaked in April

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The numbers: U.S. private sector firms reported a slightly slower rate of contraction in activity in May, according to latest PMI data from IHS Markit.

The firm said its flash manufacturing purchasing index rose to 39.8 in May from 36.1in April. Meanwhile the flash services purchasing managers index rose in May fell to 36.9 from 26.7.

Any reading below 50 indicates worsening conditions. The flash estimate is typically based on approximately 85%-90% of total survey responses each month.

What happened: Despite the improvement, service sector and manufacturers reported the second sharpest reduction in new orders since the global financial crisis.

Businesses remained pessimistic about the outlook over the coming year.

The big picture: Manufacturing is expected to stay weak over coming months as the economy gradually reopens, economists say. Auto makers are already experiencing the stop-and-start nature of trying to work during a pandemic.

What IHS Markit said? “Encouragement comes from the survey indicating that the rate of economic collapse seems to have peaked in April. In the absence of a second wave of COVID-19 infections, the decline should moderate further in coming month,” said Chris Williamson, chief business economist at IHS Markit.

Market reaction:U.S. stocks opened slightly higher on Thursday, with the S&P 500 Index SPX, -0.46% up 0.55 points in early trading.

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