The global economy holds steady amid mixed signals and key decisions by central banks
September 15, 2025
By Mario Catalá
United States: growth continues but with some signs of cooling
Economic growth continues in the United States, backed by the Atlanta Federal Reserve’s forecast for the third quarter of 2025, which puts GDP growth between +2.5% and +3%. This data confirms the strength of the economy, although the labor market is beginning to show signs of slowing down. The August PMIs reflect this duality: manufacturing rose to 53 (notably above July’s 49.8), while services corrected to 54.5 from the previous 55.7, with both remaining in expansionary territory.
Second-quarter GDP grew by 3.3%, exceeding the initial estimate of 3%, although this is a provisional figure. Retail sales, the main indicator of domestic consumption, continue to show strength with growth of +0.5% in August, following +0.9% revised upwards in July. Consumer confidence, as measured by The Conference Board, remained stable at 97.4 points in August, compared to 98.7 in July, despite political uncertainty. Data from the University of Michigan also reflects a similar trend, with the last two publications showing downward figures (61.7, 58.2, and finally 55.4).
In the labor market, the unemployment rate rose to 4.3% in August, marking two consecutive months of weak job creation data. Labor force participation rose by one-tenth of a percentage point to 62.3%, but average hourly earnings fell to +3.7% from the previous 3.9%, although wages continue to grow above inflation. Youth unemployment stands out negatively, shooting up to 10.5%, as does long-term unemployment, with almost 2 million people looking for work for more than 27 weeks, levels not seen since 2022. The revision of employment data brought June’s reading into negative territory, with August being the fourth consecutive month of contraction in manufacturing payrolls.
As for inflation, the CPI rose to 2.9% in August, as expected, two tenths higher than in July. The underlying reference remained at 3.1%. In July, the PCE figure remained stable at 2.6%, while the underlying figure rose by one-tenth of a percentage point to 2.8%. Inflation in the United States in the period 2020-2025 has practically doubled what it should have risen by if it had remained at annual levels close to the Fed’s target of around 2%. The Fed’s next meeting, on September 16 and 17, could bring the first interest rate cut in 2025, of 25 basis points, placing the range at 4%-4.25%. Although the possibility of a 50 basis point cut has been discussed, the probability is minimal (7.9%). By 2026, three to four additional cuts are expected, bringing the rate down to 3%. The decision will be influenced by inflation trends and the deterioration of the labor market, while the final impact of tariffs remains uncertain.
Europe: macroeconomic stability despite the political crisis in France
Current events in Europe are marked by the political crisis in France, but the economy seems to be holding up. European PMIs remain in expansion territory, although there are differences between countries, with southern European countries such as Spain and Greece publishing the best data. In August, manufacturing rose to 50.7 from 49.8 in July, while services fell slightly to 50.5 from 51 previously. Second-quarter GDP remained at 1.5%, surprising analysts who had expected a correction to 1.4%.
Retail sales remain the weak point, falling by -0.5% in July compared to the expected -0.3%, although the previous figure was revised upwards (+0.6%). Investor confidence at the ZEW Institute fell in August to +25.1 from +36 in July, affected by the French government’s lost vote of confidence. The European labor market remains solid, with an unemployment rate of 6.2% in August, although the July figure was revised upward to 6.3%.
As for inflation, the provisional CPI for the eurozone in August is 2.1%, one tenth higher than the previous month, and here too there are significant disparities between countries, in line with the expected economic growth for each: Spain has inflation of 2.8% and France 0.8%. Core inflation remains at 2.3% for the fourth consecutive month. The ECB met last Thursday, leaving interest rates unchanged for the second consecutive time, after reducing the cost of financing by 1% since the beginning of the year. If the Fed lowers rates and inflation does not rebound in Europe, there could be a further adjustment of 25 basis points in December, although this is not the majority opinion.
China: macroeconomic stability and resilience in the face of tariffs
China remains stable, with minimal variations in its main macroeconomic indicators. Second-quarter GDP grew by +5.3%, slightly below the 5.4% recorded in the first quarter, but better than market expectations (5.1%). The unemployment rate rose in July to 5.2% from 5% in June, accompanied by industrial production that fell to +5.7% in July from 6.8% in June, although it remains at solid levels.
August PMIs remain close to 50: 49.4 in manufacturing and 50.3 in services, both slightly better than expected. August CPI returned to negative territory (-0.4% vs. -0.2% expected and 0% in July), reflecting weak domestic demand, which remains the unresolved issue. Inflation in China has been consistently below 1% since March 2023. The August PPI stood at -2.9%, as expected by experts, compared to -3.6% in July, with falling production costs offsetting some of the tariff surcharges.
August exports and imports grew below forecasts: +4.5% for exports (5% estimated) and +1.3% for imports (4.1% estimated), which has allowed for the expansion of China’s trade balance, despite lower shipments to the US.
The global economy faces the last quarter of 2025 with mixed economic signals and clear geopolitical risks, but with financial markets continuing to reach new highs, encouraged by a context of still-growing corporate earnings and the expectation that the Fed could begin a cycle of rate cuts, which would undoubtedly favor listed companies. Looking ahead, it will be important to see how Trump’s tariffs ultimately impact different economies and to understand the extent to which the Fed’s future interest rate cuts have already been priced in by the markets.