Global economic growth eases for second month running as manufacturing upturn slows

The rate of global economic expansion slowed for the second successive month in July but remained among the best registered over the past year, data from the month’s J.P. Morgan Global Composite PMI Output Index reveals. Although job growth was sustained for the third successive month, business optimism dipped to its lowest level since last November amid heightened geopolitical uncertainty and slower growth of new business.

The index – produced by J.P.Morgan and S&P Global in association with ISM and IFPSM – fell to 52.5 in July, down further from May’s 12-month high of 53.7. The headline index has signalled expansions in each of the past nine months, although the latest reading was the weakest since April.

Although the rate of increase in service sector activity improved slightly in July, the upturn at manufacturers eased to near-stagnation. This reflected the diverging trends in new business between the sectors. Service providers saw new work intakes rise for the ninth successive month, in contrast to the first drop in manufacturing new orders since January.

Of the 13 nations for which combined manufacturing and services PMI were available, all except three registered expansions of output (the exceptions being Germany, France and Australia). Growth was led by India, followed by Brazil and then the US. Three countries saw faster rates of increase (the UK, Brazil and Kazakhstan), while Japan and Russia returned to expansion following recent contractions. Growth (on average) slowed to a near-stagnant pace across the euro area.

Job creation was sustained for the third successive month in July, with the rate of increase staying at June's 12-month high. Staffing levels were raised in almost all the nations covered, with the sole exception of Germany. The latest increase in global employment reflected solid job growth in the service sector, as manufacturing employment was unchanged compared to the previous survey month.

Business optimism regarding the year-ahead outlook for business activity dipped to an eight-month low in July, remaining below the survey's long-run average for the second month running. Developed markets were more optimistic about the future than emerging markets on average.

Input price inflation accelerated to a ten-month high in July. The rate of increase in service sector costs was the quickest since March and remained above that signalled for manufacturing purchase prices for the twenty-seventh successive month.

Part of the cost increase was passed on to clients in the form of higher charges in July. However, the rate of selling price inflation eased to the weakest since October 2020. The rate of increase in global manufacturing remained below the service sector.

 

Annual securities lending revenue down 11% to US$843m in July

The global securities finance industry generated US$843m in revenue for lenders in July, according to DataLend, the market data service of fintech EquiLend. The figure represents an 11% decrease from the US$943m generated in July 2023.

Global broker-to-broker activity, where broker-dealers lend and borrow securities from each other, totalled an additional US$219m in revenue in July, down 7% year-over-year.

Amid a continued bull market, US equity lending revenue remained the most significant laggard, falling 20% year-over-year. Decreased fees were the driver, with the average borrowing cost for US stocks declining 21% from July 2023. However, with fees bouncing in July, US equities showed positive momentum with a 22% revenue increase month-over-month.

In the global equity lending market, Taiwanese securities continued to generate strong returns, with revenue increasing 59% year over year. Loan balances for Taiwan equities climbed a sharp 43%, while fees also increased 11% compared to 2023.

In fixed income, global lending revenue for corporate bonds continued to cool, falling 23% year-on-year. The dip was driven by investment-grade issuances, where a 28% drop in fees led to a 21% decline in revenue.

Global sovereign debt revenue improved 8% year-on-year as balances climbed 15%. US Treasury lending accounted for most of the improvement, with revenue rising 14%.

 

BNP Paribas enters exclusive negotiations to acquire AXA Investment Managers 

The BNP Paribas Group has entered into exclusive negotiations with AXA to acquire 100% of AXA Investment Managers (AXA IM), representing close to €850bn assets under management, together with an agreement for a long-term partnership to manage a large part of AXA’s assets.

BNP Paribas Cardif, the insurance business of BNP Paribas, after having directly proceeded to the proposed transaction as principal, would have the opportunity to rely on this platform for the management of up to €160bn of its savings and insurance assets. With the combined contribution of BNP Paribas’ asset management platforms, the newly formed business would have total assets under management of €1,500bn.

A BNP Paribas press release notes that this AUM would see the new business become the leading European player in the management of long-term savings assets for insurers as well as pension funds, with €850bn of assets, leveraging platforms of public and private assets. The acquisition would also allow the combined businesses to benefit from AXA IM Alternatives’ market position and track record in private assets which will drive further growth with both institutional and retail investors.

The agreed price for the acquisition and the set-up of the partnership is of €5.1bn at closing, expected mid-2025. The signing of the proposed transaction, expected by the end of the year, is subject to the information process and consultation of the employees’ representative bodies. The closing of the transaction is expected by mid-2025 once regulatory approvals have been obtained.

 

Genpact and Advantage Solutions to boost CPG and retail finance efficiencies

Genpact, a global professional services firm, intends to expand its strategic alliance with Advantage Solutions, a provider of business solutions to consumer goods companies and retailers. The partnership will specifically address finance and supply chain challenges in the consumer packaged goods (CPG) and retail sectors.

The collaboration is expected to address order-to-cash and supply chain management inefficiencies, including deductions leakage, poor recovery of invalid claims, manual customer service operations, as well as inefficient supply chain planning, logistics and fulfilment. As the collaboration evolves, the companies plan to introduce new solutions aimed at meeting the changing needs in the CPG and retail sectors, ensuring clients benefit from innovations and improved operational efficiencies.

Leakage can account for 7% to 10% in lost revenue due to inefficiencies in the deductions process, and Genpact addresses this using advanced data analytics, generative AI, and automation technologies like Genpact Cora to enhance productivity in contract automation, order management, cash applications, and deductions.

Genpact's and Advantage’s planned solution for supply chain management is expected to include a SaaS-based platform that will digitise order management and trade promotions deductions, enhancing speed, accuracy and customer satisfaction. Small to midsize businesses and brands often face challenges with cost-effective, reliable and expedited order-to-cash management.

“Under our new expected collaboration, clients would be able to enjoy enhanced, digitised and automated operations,” said Brandon Thornell, Executive Vice President for Branded Services, Advantage Solutions. “They will be able to harness the power of data, analytics and digital offerings on a global scale, providing both cost efficiencies and growth opportunities. In the supply chain domain, we are committed to optimising operations through data-driven insights that enhance inventory management, reduce transportation costs and improve demand forecasting.”

 

SouthState Bank joins Nacha as direct member

SouthState Bank has become Nacha's newest direct member. This means that Nacha now has 46 direct members, including financial institutions and payments associations.

“Joining Nacha as a direct member gives us a significant role in shaping the rules governing the ACH Network, ensuring our customers can continue to send and receive payments quickly and securely,” said Mark Robertson, EVP, Director of Corporate Financial Services Administration at SouthState Bank.

Nacha’s direct membership programme offers financial institutions and organisations an opportunity to help shape the future of the ACH Network. Direct members can vote on proposed Nacha operating rules, contributing to the ACH Network’s efficiency, security and reliability. Additionally, direct members can nominate, elect and serve on Nacha’s Board of Directors, providing strategic guidance for the ACH Network and Nacha’s role as a payments industry association.