Global Growth on Life Support: Services Hold Up While Manufacturing Implodes—Is the Boom Dead?

Global business surveys continue to paint a picture of moderation rather than acceleration—growth is still intact, but the engine is running at a slower pace, and structural divergences are becoming more distinct. Across multiple regions the tone of the PMI data is cautiously upbeat: composite indexes remain above the 50 threshold in most major economies, signalling expansion, but cracks are visible in manufacturing, export demand and employment ramp-up. In short: services are holding up, manufacturing is faltering, inflation is easing—but the risk of a growth plateau looms.

Regional Trends & Dynamics

In Australia , the composite PMI rose to 52.6 from 52.1, the fastest pace in three months, signalling a degree of recovery. Services ticked up to ~52.7, while manufacturing returned to expansion (~51.6 from ~49.7). New goods orders rose for the first time since August, though export goods orders remained weak and backlog pressures continued to ease. This suggests the domestic economy is regaining momentum, but the global external demand remains soft. In the Eurozone , the composite PMI held at ~52.4, delivering an 11th straight month of growth; services recorded ~53.1 (an 18-month high), while manufacturing slipped further to ~49.7. New orders rose, but more slowly, and export order volumes declined. Employment growth is flattening, and input-cost inflation rose but output-price inflation dipped to its weakest in over a year. The eurozone thus remains a two-speed economy: services powering forward, manufacturing dragging. In Germany , the divergence is especially stark. The composite dipped to ~52.1 from ~53.9, services slowed (~52.7 from ~54.6), and manufacturing slid into contraction at ~48.4. Export orders in manufacturing collapsed sharply, backlogs continue to shrink, and employment in goods production is deteriorating. Here the weakness in the manufacturing base raises broader questions about Germany's industrial cycle and spill-over into the rest of the eurozone. In India , the most robust performer of the set, the composite reached ~59.9 (down slightly from ~60.4). Manufacturing eased to ~57.4 (weaker than ~59.2) due to export weakness and price competition, but services remained resilient at ~59.5. Hiring remains positive, and input-cost inflation is at the slowest pace in five years; output-price inflation is at an eight-month low. India's story: strong but showing early signs of moderation. In Japan , the composite rose to ~52.0 from ~51.5, with services ~53.1 and manufacturing still sub-50 at ~48.8. Manufacturers continue to see weak new orders and export demand, even as services hiring picked up to the strongest rate since June. Input-cost pressures ticked up, though output-price inflation remained moderate. The Japanese economy is subtly gaining ground, but remains narrowly dependent on services with a weak manufacturing leg. In the UK , growth is barely crawling ahead: composite ~50.5 (from ~52.2), services ~50.5, manufacturing just crossed into growth (~50.2). Employment and new business volumes are weak, and output-price inflation registered its slowest pace since late 2020. The UK economy is in low gear, with risk of stalling if sentiment fails to improve.

Manufacturing vs. Services Breakdown

Across the regions the dominant theme is: services > manufacturing. Services PMI readings continue to run comfortably above 50 in nearly all cases, reflecting resilient domestic demand, while manufacturing is either weak, flat or contracting in many developed markets. Export and new order weakness is far more pronounced in manufacturing than in services. For example, German manufacturing contracting sharply versus strong services, India's manufacturing still expanding but losing steam, and Japan's manufacturing still sub-50. The portfolio implication: economies that lean on domestic services show greater resilience; export/manufacturing-heavy economies are more vulnerable to global slowdowns.

Inflation, New Orders & Exports

Inflation trends across these PMIs suggest easing pressures. In the eurozone, input-cost inflation rose, but output-price inflation fell to its weakest in over a year. In India, input-cost inflation rose at the slowest rate in over five years and output-price inflation hit an eight-month low. Australian input costs ticked up but remained muted. Services inflation remains more of a concern in many regions (wages, labour and materials), but goods inflation is subdued. New orders and export demand are the weaker links: manufacturing new orders (especially export orders) continue to decline in Germany and the eurozone, Australia's manufactured goods export orders remain weak, and Japan's manufacturing new orders and export demand remain weak. That suggests the global trade-driven growth model is under strain, even as domestic services demand holds up.

Overall Takeaway for the Global Economy

What the surveys tell us is that the global economy remains in growth mode—but it isn't accelerating; it is consolidating. The services sectors of major economies are doing the heavy lifting, while manufacturing and trade-exposed sectors are faltering. Inflation pressures are easing, which gives central banks some breathing room, but employment growth is uneven and new business flows (especially export orders) are softening. From a strategic viewpoint, the risk-reward is shifting: the upside surprise canvas is thinner, while downside risks (manufacturing slump, trade disruption, weak sentiment) loom larger. For investors and policymakers, this means lesser scope for pro-cyclical exposure and more need for selective positioning—lean toward service-oriented sectors, cautiously monitor manufacturing/output chains, and stay alert for export-demand shocks. For central banks, the data suggest no immediate surge in inflation—but also no slump that demands aggressive easing. The global PMI readings underscore that we are in a mid-cycle plateau: growth is alive but not vibrant, and the next leg depends on whether global trade/manufacturing can revive or whether the services-led growth base will carry the baton forward alone.