Our scenario continues to be that the global economy will accelerate in H2 2021, as the headwinds from the pandemic fade and activity in the services sector normalizes, aided by a revival across Europe that joins the growth surge in the US.

However, the latest PMI surveys pose a challenge to the outlook. After falling nearly 2 points in June, the global all-industry PMI for July fell nearly one point from its May record high. At 55.7, the all-industry manufacturing PMI still points to a robust annualized growth rate of 4.0% in global GDP.

Regional variation in PMIs is highlighted in this month's report, with the eurozone PMI rising in July (mainly thanks to strong gains in Germany) and strong gains in China and India more than offset by declines in the US, UK, Australia, and Russia.

The decline in PMIs reflects unexpected falls in service and manufacturing production indices.The global manufacturing PMI fell last month and is now down 1.4 points from its peak in April. Signs of bottleneck pressures in manufacturing are clear, as delivery times have skyrocketed to their highest levels in more than a decade, while inventories continue to fall and price pressures remain intense. However, the most surprising thing in this month's report is the sharp 1.2-point drop in the global services sector manufacturing PMI, which is now almost 3 points below its decade high in May.

The loss of momentum in the manufacturing PMI for the entire industry is reflected in signs of a slight slowdown in demand. It is clear that supply constraints continue to weigh on manufacturing. However, the new orders PMI fell for both manufacturing and services for the second consecutive month, while a further decline in the overall employment PMI sends a warning signal that bottlenecks could amplify the real side effects if they begin to slow the pace of post-pandemic rehiring.

Finally, it is encouraging to see that the PMI for the consumer services sector is maintaining momentum at a high level. Forglobal growth to pick up in the coming months, a recovery in consumer services from depressed levels is key, and the latest PMIs are consistent with this.