Most Asian business sectors expanded in May, with banking overtaking the automobile industry, according to the S&P Global Asia Sector PMI released on Wednesday.

Leading the upturn for the first time in seven months, the banking sector expanded at its second-steepest rate in over five and a half years. The growth follows a previous S&P Global forecast warning that credit losses in the Asia-Pacific banking sector could surge by approximately $180 billion due to the ongoing conflict in the Middle East.

The automobile sector, last month's top performer, slipped to second place, though its pace of growth remained historically high.

Of the 18 sectors monitored, only forestry and paper products, alongside construction materials, recorded a contraction in new orders; however, these declines were softer than in the previous month. In contrast, the transportation sector posted the strongest surge in new orders, despite looming concerns over U.S.-Iran negotiations.

Volatility persists in the energy and oil industries due to the precarious state of U.S.-Iran talks aimed at ending the Middle East conflict.

"Oil prices received a boost yesterday as talks between the US and Iran appeared to break down -- again. This has become a common pattern in recent months, and there are still plenty of mixed messages," ING'S Warren Patterson and Ewa Manthey said in a Tuesday note. "As a result, oil prices continue to be whipsawed by quickly changing headlines."

Operating expenses increased across all 18 sectors. S&P Global highlighted that real estate recorded a renewed rise in input prices, while the chemicals sector posted the sharpest cost inflation rate.

All sectors increased their selling prices except for the consumer services sector.