The following is an extract from S&P Global Market Intelligence's latest Monthly PMI Bulletin. For the full report, please click on the 'Download Full Report' link.

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Global economic growth slowed to a crawl in July, according to the latest PMI survey data, led by the developed world falling into contraction for the first time in two years. The J.P.Morgan Global Composite Output Index* (compiled by S&P Global) fell sharply from 53.5 in June to 50.8 in July.

The latest reading signals only marginal growth and is the weakest since the recovery from the initial pandemic lockdowns began two years ago. Barring these lockdown months, the July reading was the joint-second lowest for a decade, the current degree of malaise exceeded only by the near-stagnation seen in February 2016. At its current level, the PMI is indicative of annualised global GDP growth of just 2%.

Both the US and eurozone reported renewed falls in output and the pace of expansion slowed in the UK and Japan, yet growth in the major emerging markets generally remained resilient. Worldwide manufacturing output growth stalled and the recent surge in service sector activity lost significant momentum.

Companies blamed tightening financial conditions, heightened uncertainty linked to the Ukraine war, shortages and, most importantly, high inflation for the deteriorating business environment. Optimism about the year ahead likewise fell further in July, prompting a pull-back in global hiring.

Encouragement came from a weakening of global inflationary pressures, with average prices charged for goods and services rising at the slowest rate for ten months thanks in part to lower input cost inflation, though also attributable to the recent slowing of demand growth.

Lewis Cooper, Economist, S&P Global Market Intelligence
Tel: +44 1491 461019
lewis.cooper@spglobal.com

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Purchasing Managers' Index™ (PMI™) data are compiled by IHS Markit for more than 40 economies worldwide. The monthly data are derived from surveys of senior executives at private sector companies, and are available only via subscription. The PMI dataset features a headline number, which indicates the overall health of an economy, and sub-indices, which provide insights into other key economic drivers such as GDP, inflation, exports, capacity utilization, employment and inventories. The PMI data are used by financial and corporate professionals to better understand where economies and markets are headed, and to uncover opportunities.

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This article was published by S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global.