Written by: Trek Investment Committee
As we step into the new year, we would like to extend a “Happy New Year!” to our readers. Now, we look ahead to 2025 with a snapshot of recent global economic activity and observations for the months ahead.
Global Economy: A Strong Finish to 2024
The global economy showed signs of stability as 2024 came to a close. The J.P. Morgan Global Composite Purchasing Managers’ Index (PMI), a key measure of economic activity, rose slightly to 52.4 in November from 52.3 in October, indicating modest expansion in the services and manufacturing sectors.1
This increase marks the third consecutive monthly improvement, supported by new orders growing at their fastest pace in seven months. Economies such as the United States, India, and Spain demonstrated consistent growth momentum, while manufacturing activity in parts of emerging Asia also improved. These data points highlight areas of resilience amid ongoing global challenges.2
Services Sector Leading Growth
The services sector continues to play a role in global economic performance. The Services PMI increased to 54.1 in December, up from 52.1 in November, signaling growth. This trend reflects ongoing consumer demand and business activity. India’s services sector, for example, saw heightened activity in December, reaching a four-month high.3,4
Manufacturing Recovery: Challenges and Opportunities
While the global manufacturing sector encountered challenges in 2024, there are indications of stabilization in certain regions. The S&P Global U.S. Manufacturing PMI remained in contraction territory in December, registering 49.4 compared to 49.7 in November. In contrast, India’s Manufacturing PMI rose to 57.7, suggesting solid growth in that region.
However, structural challenges in parts of Europe, such as Germany and France, continued to weigh on manufacturing output. Additionally, potential new tariffs and ongoing cost pressures in some markets may influence manufacturing recovery efforts moving forward.4,5,7
What to Watch
While data suggests areas of optimism, several factors warrant monitoring:
- Geopolitical and Trade Uncertainty: Changes in trade policies or tariffs could impact global supply chains and manufacturing activity.7
- Inflation Trends: Although inflation levels have moderated, they remain elevated compared to pre-pandemic norms. The Global Supply Chain Pressure Index recently ticked upward, which could pose challenges for price stability.8
- Market Volatility: Economic data, such as inflation or GDP growth, could influence central bank policy decisions, potentially introducing volatility in financial markets.9
Looking Ahead
Historical data show that periods of economic expansion, as indicated by improving PMI readings, can coincide with broader market strength. However, it is important to note that economic and market conditions remain subject to change.10
While 2025 presents encouraging economic data, it is important to approach the year with a balanced perspective. While economic indicators may point to areas of resilience, market conditions can always shift, emphasizing the importance of remaining informed.
Sources:
Disclosure:
This overview presents a cautious interpretation of current economic indicators and their potential implications for investors. It’s important for investors to remember that market conditions are inherently uncertain and subject to change. The information provided here should not be considered as personalized investment advice or a prediction of future market movements. Investors are encouraged to consult with their financial advisor to discuss their individual financial situation and goals. A comprehensive investment strategy should consider the investor’s risk tolerance, investment time horizon, and any changes in economic conditions.
Investment Advisory Services offered through Trek Financial LLC, an investment adviser registered with the Securities Exchange Commission. Information presented is for educational purposes only. It should not be considered specific investment advice, does not take into consideration your specific situation, and does not intend to make an offer or solicitation for the sale or purchase of any securities or investment strategies. Investments involve risk and are not guaranteed, and past performance is no guarantee of future results. For specific tax advice on any strategy, consult with a qualified tax professional before implementing any strategy discussed herein. Trek 25-105
