Weekly Global Economic Update | Deloitte Insights
Date: Week of May 25, 2026
Deloitte’s team of economists, led by Chief Global Economist Ira Kalish, provides a comprehensive overview of the current global economic landscape. This week’s update covers notable developments across multiple regions, with insights into manufacturing, consumer spending, inflation trends, and the impact of geopolitical tensions.
United States: Manufacturing Growth Amid Supply Chain Concerns
The U.S. manufacturing sector experienced a significant surge in the Purchasing Managers’ Index (PMI) for April and May, reaching a 49-month high of 55.3 in May, signaling rapid growth. PMIs are forward-looking indicators used to gauge economic activity in manufacturing and services. A reading above 50 indicates expansion, with higher values representing faster growth.
However, this surge is nuanced. The increase largely reflects precautionary inventory building as businesses anticipate supply-chain disruptions due to the ongoing geopolitical conflict in the Middle East. While output rose sharply, new orders hit a two-year low in May, pointing to demand weakness beneath the surface growth.
The service sector PMI for May showed a dip from 51 to 50.9, indicating modest expansion but highlighting underlying weaknesses. Combining manufacturing and services, the composite PMI remained steady at 51.7 in May, reflecting overall modest economic growth.
S&P Global analysts note that economic pressure from the Middle Eastern conflict is becoming evident, with higher prices squeezing demand and companies reducing staff amid rising costs. The data suggests the U.S. economy may struggle to sustain annualized GDP growth beyond 1% for the second quarter. Elevated oil and commodity prices are expected to keep dampening demand, raising concerns about stagflation risks — where slow growth coincides with rising inflation.
China: Slowing Growth Driven by Energy Prices and Consumer Caution
China’s latest economic indicators for April reveal a cooling economy, influenced by higher energy prices stemming from the Middle East conflict and broader global factors.
Retail sales growth slowed dramatically to just 0.2% year-over-year – the slowest pace since the lifting of pandemic-related restrictions in late 2022. On a monthly basis, retail sales actually declined by 0.5%. Large durable goods experienced notable drops: automobile sales fell 15.3%, home appliances 15.1%, building materials 13.8%, and furniture 10.4% year-over-year. Conversely, some sectors like tobacco and alcohol (+11.7%), communications equipment (+6.2%), and cosmetics (+4.7%) saw sales gains. The overall pattern suggests consumers are deferring big-ticket purchases amid uncertainty and rising energy costs, while service consumption sees modest improvement.
Industrial production grew 4.1% year-over-year in April, marking the slowest increase since July 2023, with little change month-to-month. Manufacturing output rose 4%, utilities increased 5.3%. Among key manufacturing industries, growth was seen in computers and communications equipment (+15.6%), railway and shipbuilding (+8.2%), automobiles (+9.2%), and oil and gas (+4.6%). Despite these gains, domestic demand softness limits broader industrial growth.
Eurozone, Japan, Gulf Region, and Southeast Asia: Regional Impacts and Outlook
While detailed figures are forthcoming for other regions, Deloitte highlights that the Eurozone faces continued economic pressure from energy price spikes and geopolitical instability. Japan encounters challenges related to export slowdowns amid global demand uncertainties. The Gulf countries remain critical players given their role in energy markets, with potential spillover effects on global supply and prices. Southeast Asia’s economic outlook depends heavily on trade balances and supply chain resilience in a turbulent world economy.
Conclusion
Global economic activity in late May 2026 reflects the complex interaction of geopolitical tensions, rising commodity prices, and shifting consumer behaviors. The U.S. manufacturing sector shows resilience but is tempered by inventory-driven growth and demand softness. China’s economic deceleration underscores the challenges from elevated energy costs and cautious consumers. Overall, Deloitte’s Weekly Global Economic Update advises vigilance as inflationary pressures and supply risks threaten to slow growth in multiple key economies.
Businesses and policymakers are encouraged to closely monitor these evolving trends to navigate the uncertainties ahead.
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Contact:
Ira Kalish
Chief Global Economist, Deloitte Services LP
[email protected] | +1 310 420 0392
Source: Deloitte Insights, Weekly Global Economic Update, May 26, 2026