Global PMI Rebounds, with Developed-Market Services as the Main Driver

Overview

Goldman Sachs tracks the global Purchasing Managers' Index for July 2026. The global composite PMI rebounded to 52.6, remaining in expansion territory, mainly driven by services. Developed-market services performed significantly better than emerging markets, with activity improving in the United States and the euro area, while both manufacturing and services slowed in China. Employment and forward-looking subcomponents strengthened, manufacturing price pressures declined, but services price pressures rose slightly.

Core views

Global growth momentum improved marginally in July, but the recovery structure is uneven. Services were the core source of the rebound in the composite PMI, and the improvement was highly concentrated in developed markets. U.S. manufacturing and services indicators were both in a relatively strong expansion range, and the euro area also improved; by contrast, China's services PMI fell into contraction territory, while manufacturing dropped to the boom-bust line. Forward-looking activity and employment indicators rose, supporting short-term growth, but the euro area composite PMI still declined on a three-month basis, and deteriorating supplier delivery times in North America also suggest that supply frictions have not disappeared.

Analysis framework

The report uses a monthly PMI diffusion index framework to compare changes in manufacturing and services across the world, developed markets and emerging markets, as well as major economies such as the United States, the euro area, and China; it also tracks subcomponents such as future activity, orders-to-inventories ratio, employment, supplier delivery times, input and output prices, and new export orders. U.S. indicators use the average of ISM and S&P Global, China-related indicators use a combination of private surveys and official NBS indicators, and global value-added weights are used to screen important economies for cross-sectional comparison.

Methodology notes

• Macro Sentiment AnalysisPMI Diffusion Index Tracking

  Uses 50 as the dividing line between expansion and contraction, combining index levels and monthly changes to assess the direction of economic activity and marginal momentum.

  The report observes composite, manufacturing, and services PMIs separately, and compares sentiment differences across the world and major economies.

• Leading Indicator AnalysisPMI Forward-Looking Subcomponents

  Assesses subsequent activity trends through services future activity and the manufacturing orders-to-inventories ratio.

  In July, the services future activity index rose 0.7 points to 60.3, and the manufacturing orders-to-inventories ratio rose 0.01 to 1.07, pointing positively in the short term.

• Inflation Pressure AnalysisInput and Output Price PMI

  Uses diffusion indices for corporate input costs and output prices to observe price pressures along the industrial chain.

  Manufacturing price indicators fell markedly, while services price indicators rose slightly, showing that inflation pressures are diverging across sectors.

• Cross-Economy ComparisonValue-Added Weighting and Abnormal Change Screening

  Focuses on economies with a global value-added weight of no less than 0.5%, as well as countries where PMI levels or changes deviate significantly from cross-economy averages.

  This method highlights major economies and abnormal changes, but the chart screening results are not equivalent to a complete country sample.

Asset mapping & comparison

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

• Developed-Market Services-Related Assets

  Positive

  Strengths

  Services business activity PMI rose to 53.2, with a significant improvement, while employment and future activity indicators strengthened simultaneously.

  Weaknesses

  Services input and output prices continued to rise, and cost pressures may compress margins and limit the scope for monetary easing.

  Comparison

  Significantly better than the emerging-market services PMI of 50.9.

  Risks

  Survey indicators may fluctuate in the short term, while price stickiness and interest rates remaining high may suppress demand.

• U.S. Risk Assets

  Somewhat Positive

  Strengths

  Manufacturing PMI rose to 54.8 and services PMI rose to 54.4, with economic activity maintaining relatively strong expansion.

  Weaknesses

  ISM services performance was slightly below expectations, and longer supplier delivery times may reflect supply frictions.

  Comparison

  U.S. manufacturing and services sentiment levels are both higher than those of the euro area and China.

  Risks

  Growth resilience and services price pressures may delay rate cuts and constrain high-valuation assets.

• European Risk Assets

  Moderately Positive

  Strengths

  Europe's composite PMI generally improved in July, and the euro area services PMI rose 2.2 points.

  Weaknesses

  On a three-month basis, the composite PMIs of the euro area and the United Kingdom still declined.

  Comparison

  Monthly momentum improved, but the medium-term trend is weaker than the magnitude indicated by the single-month data.

  Risks

  If the improvement cannot be sustained, growth expectations may be revised down again.

• China and Emerging-Market Risk Assets

  Somewhat Negative

  Strengths

  China's manufacturing PMI remains at 50.0 and has not clearly fallen into contraction territory.

  Weaknesses

  China's services PMI fell to 49.8, and the emerging-market services activity indicator declined by 2.6 points.

  Comparison

  Activity momentum is significantly weaker than in developed markets, especially lagging behind the United States and the euro area.

  Risks

  Weak domestic demand, insufficient policy transmission, and divergence in external demand may prolong the downturn in sentiment.

• Global Inflation and Interest-Rate-Sensitive Assets

  Divergent Signals

  Strengths

  Manufacturing input and output price PMIs fell by 2.3 points and 1.8 points respectively, with goods price pressures easing somewhat.

  Weaknesses

  Services input and output price PMIs still rose slightly, indicating sticky core services inflation.

  Comparison

  Manufacturing is showing cooling signals, while services continue to maintain relatively strong price pressures.

  Risks

  If services inflation persists, the pace of rate cuts by major central banks may be slower than market expectations.

Key data

• Global Composite PMI52.6Up 0.6 points month-on-month in July.
• Global Manufacturing PMI52.1Down 0.1 points month-on-month in July.
• Global Services PMI52.5Up 0.8 points month-on-month in July.
• Developed-Market Services Business Activity PMI53.2Up sharply by 2.6 points month-on-month.
• Emerging-Market Services Business Activity PMI50.9Down 2.6 points month-on-month.
• U.S. Manufacturing PMI54.8Average of ISM and S&P Global, up 1.1 points month-on-month.
• U.S. Services PMI54.4Average of ISM and S&P Global, up 1.8 points month-on-month.
• Euro Area Manufacturing PMI51.9Up 0.4 points month-on-month.
• Euro Area Services PMI51.7Up 2.2 points month-on-month.
• China Manufacturing PMI50.0Average of RatingDog and NBS, down 1.0 points month-on-month.
• China Services PMI49.8Average of RatingDog and NBS, down 2.4 points month-on-month and entering contraction territory.
• Services Future Activity Index60.3Up 0.7 points month-on-month.
• Manufacturing Orders-to-Inventories Ratio1.07Up 0.01 month-on-month.
• Global Manufacturing Employment PMI50.4Up 0.8 points month-on-month.
• Global Services Employment PMI50.5Up 0.6 points month-on-month.
• Global Manufacturing Input Price PMI60.7Down 2.3 points month-on-month.
• Global Manufacturing Output Price PMI55.2Down 1.8 points month-on-month.
• Global Services Input Price PMI59.9Up 0.4 points month-on-month.
• Global Services Output Price PMI55.3Up 0.1 points month-on-month.

Impact & implications

The data support the view that the global economy will maintain modest expansion in the short term, which is especially favorable for assets sensitive to developed-market domestic demand and services consumption. Improved sentiment in the United States and the euro area may reduce market concerns about a near-term growth downturn, but may also make expectations for monetary easing more dependent on subsequent inflation data. Weakening China PMI and cooling emerging-market services indicate that global growth is not undergoing a synchronized recovery. The decline in manufacturing price pressures helps ease goods inflation, but services prices remain sticky, and the process of core inflation decline may continue to be uneven.

Risks

• PMI is a survey-based diffusion index, and monthly fluctuations may not necessarily correspond accurately to actual output growth.
• U.S. and China indicators are composed of averages from multiple surveys, and differences in samples and methodologies across surveys may affect comparability.
• The global improvement is mainly driven by developed-market services, with high regional and sector concentration, and the foundation of the recovery is uneven.
• Europe's three-month trend remains weak, and a single-month rebound may overstate the degree of sustained improvement.
• Services price pressures are still rising, which may delay the decline in core inflation and easing by major central banks.
• Deteriorating supplier delivery times in North America may reflect supply chain disruptions and push some costs higher again.
• The report is macro thematic research and does not constitute investment advice for any single security.

What to watch

• Whether developed-market services PMIs can remain above 53 consecutively, and whether emerging-market services can stabilize.
• Whether China's services PMI can return above 50, and whether manufacturing can move away from the boom-bust line.
• Whether improvements in the services future activity index and the manufacturing orders-to-inventories ratio can translate into actual output growth.
• Whether global manufacturing and services employment PMIs can remain in expansion territory.
• Whether the divergence between cooling manufacturing prices and sticky services prices widens further.
• Whether the three-month composite PMI trends in the euro area and the United Kingdom end their decline.
• Subsequent changes in North American supplier delivery times as well as global trade and new export order indicators.