Charting The Global Economy: US Retail Sales Point To Resilience, China Sees Broad Slowdown

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Retail sales rose in July in a broad-based advance and the prior month was revised higher, though economists were cautious on the trend going forward given a softening jobs market and weaker consumer sentiment.

Underlying US inflation accelerated in July by the most since the start of the year, though a tepid rise in the costs of goods tempered concerns about tariff-driven price pressures. The pickup in the core CPI was fueled by services prices. Excluding energy, they climbed the most since the start of the year.

Across the US, the costs of purchasing a home are compounding from a lack of new construction since the 2008 financial crisis, the lock-in effect of homeowners unwilling to relinquish low-rate mortgages, plus government policies that make buying and building more expensive.

China’s economy slowed across the board in July with factory activity, investment and retail sales disappointing, suggesting Beijing’s crackdown on destructive price wars and spillovers from US tariffs are casting a pall over the world’s No. 2 economy. The urban unemployment rate climbed more than expected to 5.2%.

China’s first contraction in outstanding loans since 2005 has crystallized worries about a deepening downturn for the world’s second-largest economy.

A 50% US duty on imports from India would be the highest tariff rate in Asia, threatening a manufacturing sector that Prime Minister Narendra Modi has spent a decade trying to build to take on the likes of China. The “Make in India” campaign was supposed to lift manufacturing to 25% of the economy. Last year, it stood at just 13% — lower than the 16% in 2015, according to World Bank data. 

The UK economy fared better than expected in the second quarter, bringing some relief for Chancellor of the Exchequer Rachel Reeves but raising the bar to further interest-rate cuts from the Bank of England.

Britain’s jobs market appears to be past the worst with a smaller-than-expected drop in payrolls last month, further complicating the Bank of England’s decision over whether to carry on cutting interest rates. The Office for National Statistics reported an 8,353 decline in employee numbers in July — the smallest fall since January. 

Growth in the Russian economy is stalling. Oil revenues have slumped. The budget deficit has widened to the largest in more than three decades. Inflation and interest rates remain painfully high. Behind the walls of the country’s banks, some insiders are sounding alarms about a looming debt crisis.

Fewer people are entering vocational training, and among those who do, nearly one in three quit before finishing. In turn, companies are struggling to find qualified trainees. A recent survey conducted by the German Chamber of Commerce and Industry showed that 48% of all companies offering an Ausbildung in 2024 were unable to fill all their positions, and more than a third didn’t receive any applications at all. 

Brazil’s inflation rate fell much more than expected in July, a drop that offers some relief to consumers but is unlikely to change the central bank’s plans to keep interest rates at sky-high levels for the foreseeable future.

President Donald Trump’s push to redesign the global economic order in favor of the US is shaking one of the foundations of its post-World War II supremacy: the dollar’s undisputed role as the world’s reserve currency.

Central bankers in Australia lowered interest rates as did those in Thailand and Kenya. Uganda, Zambia, Namibia, Norway, Peru and Mauritius left borrowing costs unchanged.