Global Data Watch

Research evidence excerpt

J P M O R G A N

Global Economic Research

07 August 2026

Global Data Watch

Despite weak US jobs gains, we raise 2H26 US and global GDP growth

Concerns about soft US labor income and China demand offset by ...

… indicators showing building and broadening momentum

Economic and Policy Research

Next week: US RS down, core CPI moderate; China TSF

Bruce Kasman

Jobs go low, GDP forecasts go high

Having displayed impressive resilience through a set of negative shocks, the global

expansion is now poised to generate above-potential growth in the coming

quarters. As the tech boom cools to a still strong pace of growth, the relatively weak

links of the expansion (non-tech capex, Western Europe and Chinese domestic

demand) should lift, providing a broader base of growth. A more balanced

expansion should also boost hiring and further tighten labor markets. Firm pricing

power and tight labor markets are a recipe for inflation to remain elevated. Greater

balance thus comes at a cost of a gradual but broad-based policy tightening.

In tracking this outlook, the latest news delivers a varied dose of comfort, concern,

and confusion. There is, however, more cause for comfort than concern. We made

a material upgrade to our 2H26 global GDP growth forecast this week, despite a

soft US jobs report, as survey and activity data sent a convincing message of

building and broadening growth momentum.

Stand by your PMI. Our global composite output PMI rose for a fourth

straight month in July to a level consistent with a robust 2.9%ar gain in global

GDP (Figure 1). Gains were broad outside China and a jump in the new orders

and employment PMIs, led by a relatively depressed service sector, reinforces

the constructive signal. In line with this news, our 2H26 global growth forecast

moved up to a 2.6%ar this week led by upgrades in the US, Euro area, and

non-China Asia.

Euro area: The little engine that could. Despite a June retail sales drop, real

consumer spending in the Euro area is tracking a modest gain last quarter even

with the large energy price shock. Underlying GDP growth looks to be running

at about a 1%ar, while the July PMI rise points to building momentum and we

…