Goldman Sachs Global: GS Economic Indicators Update - DM Activity Outperforms
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Goldman Sachs' latest economic indicators update reveals that economic activity in developed markets (DM) continues to outperform emerging markets (EM). According to the firm's tracker, the DM composite PMI rose to 53.2 in May, marking three consecutive months of expansion, while the EM composite PMI declined to 50.8, hovering near the breakeven line. The global composite PMI edged up from 52.0 to 52.3, extending its expansionary streak to four months.
DM resilience is primarily driven by robust US service sector expansion, with the services PMI reaching 55.4, alongside emerging signs of recovery in eurozone manufacturing, which recorded a PMI of 49.2. In contrast, EM weakness stems from slowing growth in China and India, with their respective composite PMIs dropping to 50.5 and 51.0. DM strength is further supported by low unemployment and declining energy costs, whereas EM faces headwinds from weak external demand and internal structural challenges, such as China's property sector.
Goldman Sachs expects the growth divergence between DM and EM to widen to 1.5 percentage points in the second half of 2026. Key risks include US tariff policy uncertainty, the effectiveness of China's stimulus measures, and potential geopolitical disruptions.
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