Global growth driven by services amid waning confidence

The global economic expansion accelerated in July, but growth was uneven by sector amid the impact of tariffs. Trade policy changes also affected price trends with the US driving an intensification of price pressure globally. Additionally, business confidence softened in July.

The J.P.Morgan Global PMI Composite Output Index – produced by S&P Global -posted 52.4 in July, up from 51.7 in June. This is the highest reading seen since last December and represented an extension of the global economic expansion that commenced in February 2023. At its current level, the data was broadly consistent with the global economy expanding at an annualized rate of 2.7% in July after a 2.0% expansion signalled for the second quarter. This remained below an average GDP growth rate of 3.1% in the decade prior to the pandemic, however.

July’s PMI data indicated that the acceleration in global growth was attributed solely to rising services activity as manufacturing output returned to contraction. While the front-loading of orders ahead of the tariff deadline expected earlier on July 9th supported production growth in June, July’s data revealed that the effect had faded over the latest survey period. This was while the latest prices data again showed a marked difference in inflationary pressures between the US and the rest of the world on the back of tariffs.

Notably, despite an improvement in demand, which was similarly driven by services, optimism levels eased across the board. Concerns mainly centred the outlook for growth on the back of trade uncertainty.

Source: S&P GLOBAL – Jingyi Pan
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