Global overseas PMI data for July signals a more positive outlook than June, with a significant recovery in the service sector leading an upturn in composite sentiment. However, regional divergences remain pronounced.
In the United States, strong demand and production provide robust support, with manufacturing PMI expanding. The Eurozone sees modest growth from businesses clearing backlogs rather than improving market demand, indicating insufficient endogenous recovery momentum. Emerging economies are experiencing a broad-based recovery, but cost pressures and cautious employment persist.
Where to start
July global overseas PMI data conveys a more positive signal than June, as a substantial rebound in the service sector drives an upturn in composite sentiment. The U.S. manufacturing sector surges higher, the Eurozone's service sector returns to expansion, and ASEAN economies see a broad recovery, strengthening the momentum of a phased global economic recovery. Yet, significant regional divergences remain, and inflation stickiness has not been fundamentally alleviated. Uncertainties in global external demand and the phased nature of the restocking cycle indicate that the global economic recovery path will remain fraught with twists and turns.
For the commodity market, the resilience of global manufacturing sentiment and the recovery of the service sector will provide some support for demand-side drivers of industrial metals and other commodities. Energy prices are likely to remain elevated due to geopolitical tensions and supply-side constraints. Conversely, uncertainties in external demand will limit the upside potential for commodities. For the bond market, U.S. Treasury yields are likely to trend higher due to the strong U.S. economy and sticky inflation, while global bond market spreads will continue to widen as policy cycles diverge.
Key data points
Global economic activity has returned to an upward trajectory after two months of moderation, an improvement primarily driven by the service sector. Geopolitical and policy risk premiums have marginally narrowed, providing an environment that supports improved business expectations. The manufacturing sector shows resilience despite a slight decline, with healthy growth momentum in the investment goods sector, reflecting ongoing support for medium-to-long-term global corporate capital expenditure. However, structural contradictions remain prominent, particularly in upstream industries like chemicals and basic materials, where inflationary pressures are evident. The cost-push chain from upstream to midstream and downstream continues to tighten, squeezing profit margins for manufacturing enterprises.
On the demand side, the overall weakness of global external demand has not fundamentally changed. Some export-oriented economies face downward pressure on new export orders, which is a key shortcoming constraining further global manufacturing expansion.
The U.S. ISM Manufacturing PMI for July came in at 55.6, up 2.3 percentage points from June, marking seven consecutive months in expansionary territory. Strong support comes from two fronts: first, robust domestic demand, with the new orders index expanding for seven months straight and channel restocking demand continually released, creating a virtuous cycle of low inventories and strong orders. Second, a surge in production-side momentum, with the output index soaring to 58.5 and the employment index returning to expansion. The continued implementation of manufacturing reshoring policies, combined with enterprises' precautionary inventory buildup, has accelerated production activity. Additionally, inflationary pressures have marginally eased, with imported input cost pressures moderating, providing some relief for business cost burdens. However, concerns remain, as sticky inflation and supply chain uncertainties are key constraints on the Federal Reserve's policy decisions.
The Eurozone Manufacturing PMI for July was 51.9, up 0.5 percentage points from June. Notably, this modest growth stems from businesses working through backlogs rather than an improvement in market demand, indicating that the Eurozone's endogenous economic recovery momentum remains insufficient. Among core member states, France's manufacturing sector has slipped back into contraction, and Italy's continues to slow. High energy prices eroding household purchasing power, uncertainties in external demand, and fragile business confidence all suggest that the Eurozone's economic recovery path will be more arduous. A bright spot is the significant recovery in the service sector, indicating a marginal turnaround in service consumption weakness.
Business sentiment improved across emerging economies in July. By country, Indonesia's manufacturing sector returned to expansionary territory in July, supported by strong domestic demand, a month-on-month increase in business purchasing activity, and rising labor demand. Driven by improved demand from international clients, including Europe and the U.S., new export orders saw renewed growth, and Malaysia's manufacturing sector maintained its expansionary trend. The Philippines' manufacturing sector expanded for the third consecutive month, supported by strong demand for electronic products, which effectively offset the negative impact of high energy costs and boosted corporate orders and output. Thailand's manufacturing PMI rose to 54.2, with business confidence further improving. Vietnam's manufacturing PMI remained above the boom-bust line for 13 consecutive months, with the pace of expansion accelerating. Overall, the ASEAN economies are experiencing a broad recovery, but common issues like high cost pressures and cautious employment persist. The sustainability of global external demand remains to be seen.
Data source: Wind, public information, First Futures Macro Strategy Department
Editor: Wu Yujie
Reviewer: Kou Ning / F0262038, Z0002132 /
Rechecked by: Yu Xinyue
Report preparation date: August 14, 2026
Trading advisory business qualification: Securities Regulatory Commission Permit [2012] No. 38