The latest data suggest that the boost to industry and trade from businesses front-running US tariffs is over. Manufacturing activity softened in April and May, and new orders have weakened. While consumer confidence has partially rebounded from Liberation Day Tariff lows in April, it remains soft. Admittedly, credit growth seems to have recovered in DMs, but employment is weakening or even falling outright. Consumption has been a bright spot in China in recent months. But even there, this resilience is unlikely to last as fiscal tailwinds fade and the property sector continues to drag on growth. All in all, the latest data chime with our view that 2025 will be a year of slightly-below-trend global GDP growth of a touch below 3%. In turn, this should generally help bear down on inflation, even as tariffs temporarily boost inflation in the US. This should keep the Fed on hold, even as European central banks continue to cut interest rates.
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