Preparing for the second half: After an eventful first half, the drop in oil eases inflation pressures and helps sentiment. This should make central banks‘ jobs easier in principle. But Warsh‘s agenda for the Fed could introduce fresh volatility, amid above-target US inflation and ongo

Research evidence excerpt

Preparing for the second half: After an eventful first half, the drop in oil eases inflation pressures and helps sentiment. This should make central banks‘ jobs easier in principle. But Warsh‘s agenda for the Fed could introduce fresh volatility, amid above-target US inflation and ongo

Barclays | Global Economics Weekly: Preparing for the second half

China growth remains uneven

China’s activity data point to a modest stabilisation, but with a clear two-speed dynamic. The

manufacturing PMI rose to 50.3 in June (from 50.0), slightly above our forecast and the

consensus (50.1), with gains in production and a rebound in new and export orders. While this

suggests some improvement in momentum, the headline remains only marginally above the

expansion threshold, indicating the recovery is still fragile.

The divergence across sectors remains pronounced. High-tech and export-oriented industries

continue to outperform, supported by resilient external demand, while traditional and

property-linked sectors remain weak amid subdued domestic demand. Outside of

manufacturing, services have edged up modestly, while construction remains in contraction

despite increased policy support, leaving domestic demand a key drag on growth. The

RatingDog China manufacturing PMI, which has greater exposure to export-oriented firms,

remained broadly stable at 51.6 in June.

The Politburo meetings in late July and late October (or the NPC Standing Committee meeting

around that time) will be key events by which to gauge potential new stimulus.

UK growth expected to slow

In the UK, final Q1 GDP growth was unrevised at 0.6% q/q, although Q3 25 and Q4 25 growth

were both revised down 0.1pp, to 0.1% q/q. This led to 2025 annual average growth being

revised down 0.1pp, to 1.3%.