Goldman Sachs Global Economic Indicators Update: July Activity Data Surprised to the Upside

Overview

This report is Goldman Sachs' regular update on global economic indicators. Its core conclusion is that global activity indicators delivered an upside surprise relative to expectations in July. The report covers the Financial Conditions Index, Current Activity Indicator, MAP economic surprise index, inflation surprises, wage and labor market indicators, fiscal impulses, short-run utilization scores, and changes in Goldman Sachs' 2026 and 2027 GDP and inflation forecasts relative to market consensus.

Core views

The report conveys a broadly positive macro signal: global CAI remains above potential, and the MAP indicator shows activity data exceeding expectations; however, financial conditions remain a constraint, with ex-Russia global FCI tightening by 4.9bps last week due to higher long-end rates. Inflation, wages, and labor market indicators remain key variables for judging the policy path ahead and the resilience of growth.

Analysis framework

The report uses Goldman Sachs' proprietary macro indicator framework for cross-market tracking, including measuring the ease or tightness of financial conditions through financial variables, extracting CAI growth signals from high-frequency real economy indicators, constructing the MAP surprise index from daily economic data performance relative to consensus, and combining inflation surprises, wage trackers, jobs-workers gaps, and fiscal impulses to assess the growth, inflation, and policy mix.

Methodology notes

• Financial ConditionsGS Financial Conditions Index

  FCI

  Goldman Sachs' FCI is used to measure the overall degree of easing or tightening in financial conditions across major economies, providing information on GDP growth prospects, the transmission of monetary policy to the real economy, and the impact of financial shocks.

• Growth TrackingCurrent Activity Indicator

  CAI

  CAI is the first principal component of multiple real activity indicators and is expressed in GDP-equivalent units. It can be interpreted as the growth signal in the main high-frequency indicators of each economy; missing indicators are initially filled with forecasts and later replaced when actual data are released.

• Data SurprisesGS MAP Surprise Index

  MAP

  The MAP surprise index aggregates the importance and magnitude of global economic indicators relative to consensus expectations, and standardizes them through a unified framework for indicator selection, importance, surprise score thresholds, and aggregation methodology.

• InflationTrimmed Core Inflation

  Trimmed Core Inflation

  Trimmed core inflation excludes the most extreme one-third of price changes among core inflation components, and is used to observe the more stable underlying inflation trend.

• Labor MarketJobs-Workers Gaps

  Jobs-Workers Gap

  This indicator measures the gap between total labor demand and labor supply, where labor demand includes job openings and employment, and labor supply is the labor force.

• Fiscal PolicyFiscal Impulses

  Fiscal Impulse

  Fiscal impulse is used to measure the impact of fiscal policy on real GDP growth; in the report, the U.S. impulse also reflects expansionary discretionary fiscal policy and tariff-like tax effects.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Global Equities

  Upside surprises in economic activity are usually supportive of earnings expectations and risk appetite.

  Strengths

  Global CAI is above potential and the MAP indicator is strong, supporting growth expectations.

  Weaknesses

  Tighter financial conditions and higher rates could weigh on valuations.

  Comparison

  Compared with single-region data, global indicators are more suitable for judging cross-market risk appetite.

  Risks

  If inflation or wage pressures remain elevated, the policy rate path could become more hawkish.

• Government Bonds

  Financial conditions and inflation surprises can affect the yield curve and the performance of duration assets.

  Strengths

  If subsequent growth or inflation surprises ease, duration assets could benefit.

  Weaknesses

  This period's FCI tightening mainly came from long-end rates, indicating that rate pressure remains in place.

  Comparison

  The contribution of long-end rates to FCI makes the bond market the key transmission channel for this macro cycle.

  Risks

  Growth resilience combined with sticky inflation could delay rate-cut expectations.

• Foreign Exchange

  Differences in CAI, inflation surprises, and policy expectations across economies can affect exchange rates.

  Strengths

  Divergence in growth and inflation across regions can provide relative value signals.

  Weaknesses

  The report does not provide explicit currency trading recommendations.

  Comparison

  Economies associated with the U.S. dollar, euro, pound sterling, and yen are all covered within the FCI, CAI, and fiscal impulse frameworks.

  Risks

  Rapid repricing of policy expectations could amplify FX volatility.

• Commodities

  Stronger global activity indicators are usually associated with improving demand expectations.

  Strengths

  Upside surprises in activity indicators could support the cyclical demand narrative.

  Weaknesses

  The report does not directly provide commodity supply-demand or price forecasts.

  Comparison

  Compared with financial assets, the impact on commodities requires further validation with actual demand and inventory data.

  Risks

  Tighter financial conditions or a slowdown in global growth momentum would weaken demand expectations.

Key data

• Weekly change in ex-Russia global FCI+4.9bpsTightened last week, mainly driven by long-end rates.
• Japan preliminary June CAI-0.4ppThe report says Japan's preliminary CAI fell by 0.4 percentage points.
• Italy preliminary June CAI+0.4ppThe report says Italy's CAI rose by 0.4 percentage points.
• MAP presentation basis21-day moving averageThe report presents the 21-day moving average of daily MAP scores.
• Fiscal impulse calculation window2026Q1-2026Q4The Q4 metric uses the average fiscal growth impulse from 2026Q1 to 2026Q4.

Impact & implications

If global activity data continue to surprise to the upside, market pricing of global growth resilience may receive further support; however, tighter financial conditions and sticky inflation and wage indicators could limit room for policy easing. Investors should assess upside growth surprises together with pressure from the rates side, rather than judging the direction of risk assets based on a single activity indicator alone.

Risks

• Financial conditions could continue tightening, especially through higher long-end rates, which may weaken subsequent growth momentum.
• Inflation surprises or wage growth may remain sticky, potentially limiting central banks' room for easing.
• Some CAI inputs include forecasts, and the current growth signal may be revised after actual data are released.
• Fiscal policy and tariff effects may alter the U.S. and global growth-inflation mix.
• This report is a macro indicator update and does not constitute a recommendation on individual stocks or single securities.

What to watch

• Whether the MAP surprise index continues to move higher.
• Whether global and major-economy CAI readings remain above potential.
• The weekly changes in ex-Russia global FCI and U.S. and euro area FCI, as well as the contribution from long-end rates.
• Directional changes in core and headline inflation surprise indices.
• Whether wage trackers, jobs-workers gaps, and leading wage survey indicators point to renewed labor market tightening.
• Changes in 2026 and 2027 GDP and inflation forecasts relative to consensus.