According to the recently published PMI report from S&P Global, the United States (US) composite PMI stayed above the 50.0 points threshold for the 29th consecutive month, rising to 54.6 points in July from 52.9 points in June.
The uptick was largely driven by continued strength in the services sector, which expanded to 55.2 points from 52.9 points in June, marking its fastest growth in seven months. This was supported by robust new business inflows and sustained consumer spending.
However, input costs saw a renewed surge during the period, attributed to the re-emergence of tariff pressures and rising wage demands, prompting a notable increase in output prices. On the flip side, manufacturing PMI fell into contractionary territory at 49.5 points from 52.6 points in June, reflecting weaker factory output and a decline in export orders.
Despite these divergent trends, companies across both sectors ramped up hiring in response to strong demand conditions and ongoing efforts to clear backlogs.
Looking ahead, we expect private sector activity in the US to remain in expansionary territory, underpinned by domestic demand and the resilience of the services sector.
Nevertheless, rising cost pressures, softer external demand, and lingering policy uncertainty could weigh on business sentiment and dampen near-term momentum.
ECB Holds Rates Steady Amid Easing Inflation and External Risks
At the recently concluded July policy meeting, the Governing Council of the European Central Bank (ECB) decided to maintain its key interest rates at current levels, leaving the deposit facility unchanged at 2.00%, while the main refinancing operations and the marginal lending facility were held at 2.15% and 2.40%, respectively.
The decision followed signs of inflation converging toward the ECB’s 2.0% medium-term target, amid moderating wage growth and cooling domestic price pressures. Nonetheless, the ECB cited ongoing external uncertainties—particularly renewed trade tensions and tariff-related risks—as justification for maintaining its current policy stance.
While offering no forward guidance, the council reiterated its commitment to a data-dependent, meeting-by-meeting approach. At the post-meeting press conference, ECB President Christine Lagarde described the Eurozone economy as being in a “good place,” with economic growth tracking broadly in line with expectations.
The overall tone suggests a wait-and-see approach in the short term, with rates likely to remain unchanged at the next meeting scheduled for September 11, as the ECB continues to assess underlying inflation trends, wage developments, and evolving global risks before taking any further policy action.
Global Markets
Global equity markets rallied during the week, buoyed by upbeat corporate earnings and renewed optimism over potential trade breakthroughs. In the United States, the Dow Jones Industrial Average gained 0.8% while the S&P 500 rose 1.1%, lifted by stronger-than-expected earnings reports and positive sentiment surrounding trade negotiations.
European markets also advanced, with the STOXX Europe 600 climbing 0.3% and the FTSE 100 up 1.3%, as investors reacted positively to speculation around a potential 15.0% tariff deal between the US and the EU.
Asian equities mirrored the upbeat sentiment, with Japan’s Nikkei 225 jumping 4.1% and China’s SSE Composite gaining 1.7%, following news of a reduced US–Japan tariff agreement and renewed hopes for progress in upcoming US–China trade talks.
In the broader emerging and frontier markets, the MSCI EM and MSCI FM indices both closed the week up 1.4%, bolstered by gains in China (+0.7%) and Vietnam (+3.0%), respectively.
