Daily Economic Update

US: Extension of the current trade pact with China not yet confirmed; job openings drop but consumer confidence ticks up. After concluding the third round of trade talks with his Chinese counterparts, US Treasury Secretary Bessent said that President Trump would make the final call about extending the current trade agreement before its expiry on August 12. Earlier, Chinese authorities stated that both sides agreed to rollover the framework without providing any further details. Meanwhile, the latest economic data were mixed as job openings in June (JOLTS report) dropped for the first time in three months to 7.4mn from 7.7mn in May as the labor market shows steady signs of loosening. Additionally, hiring, layoffs and voluntary quits all dropped from the previous month, indicating less active market churn than previously. The Conference Board’s gauge for consumer confidence rose to 97.2 in July from June’s 95.2 but overall is still subdued versus the trend in prior years amid persistent worries about tariffs and resulting higher prices. A sub-gauge of consumers’ optimism about the future improved with receding concern over the economy and job market along with an upbeat outlook about future incomes. The US goods trade deficit in June narrowed to $86bn from May’s $96bn as the impact of front-running tariffs continues to unwind, cutting imports. This pushed the average monthly deficit to $89bn in Q2, dropping sharply from $155bn in Q1, which should help GDP rebound in Q2 following a drop of 0.5% (annualized) in Q1. The Q2 GDP data will be released later today, with markets expecting 2.4% growth. Finally, the rise in US house prices, based on an S&P/Case-Shiller index for 20 cities, further moderated in May to its lowest since August 2023 at 2.8% y/y from 3.4% in April. On a monthly basis, seasonally adjusted house prices fell for a third straight month, positing a steady decline of 0.3%.

Global: IMF slightly raises global growth forecast but cautions about continued tariff risks. The IMF, in its latest World Economic Outlook report update, revised up its forecast global growth forecast for 2025 and 2026 to 3% and 3.1% respectively, from 2.8% and 3% as projected in April. According to the IMF, the upgrade reflects the front-loading of activity in the first half, softer effective tariff rates, better financial conditions, and fiscal expansion in some key markets. However, it cautioned that the risks are tilted to downside given the potential for a rebound in tariffs, elevated uncertainty, geopolitical frictions, and larger fiscal deficits. In developed markets, growth was lifted for the US to 1.9% (+0.1% from April) and 2% (+0.3%), Eurozone to 1% (+0.2%) and 1.2% (same as in April), the UK to 1.2% (+0.1%) and 1.4% (no change) and Japan to 0.7% (+0.1%) and 0.5% (-0.1%) for 2025 and 2026, respectively. China saw the biggest upward revision for this year amongst large economies, by 0.8% to 4.8% and by 0.2% to 4.2% for 2026 but still marking a slowdown from 5% in 2024. The Fund also lowered its assumption of the effective US tariff rate to 17.3% from 24.4% in its April outlook, resulting in milder than previously anticipated protectionist measures by other countries. Despite better growth forecasts, the rise in global output is still expected to decelerate from 3.3% recorded in 2024, underscoring an overall uninspiring outturn versus the pre-pandemic trend of 3.7%. In MENA, growth in Saudi Arabia was upgraded to 3.6% (+0.6%) and 3.9% (+0.2%) in 2025 and 2026 respectively, likely reflecting revisions to oil production in light of the faster unwind of OPEC+ production cuts. Growth in Egypt was revised up in FY24/25 to 4.0% (+0.2%) but down in FY25/26 to 4.1% (-0.2%), slower than our projections of 4.3% and 4.7%, respectively.

Chart 1: IMF GDP forecast (% y/y) Source: IMF WEO update, July 2025

UK: Mortgage approvals rise as the housing market gradually stabilizes post stamp duty changes. Mortgage approvals in June unexpectedly rose to a four-month high of 64.2k from May’s 63.3k. The UK mortgage market had come under pressure in recent months as approvals fell to a 14-month low in April following a change in stamp duties, beginning this financial year, that had front-loaded transactions in prior months. House prices have also fallen by around 1% since March 2025 (as per Nationwide data) amid subdued demand. Given the weakening labor market, with falling jobs, a rising unemployment rate and slowing wage growth along with government’s likely fiscal tightening later this year, the outlook for house prices appears cautious for now, though anticipated policy interest rate cuts by the Bank of England may give housing activity a boost over the coming year. 

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