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In July 2025, the US consumer price index (CPI) rose modestly on both a monthly and yearly basis. US President Donald Trump met Russian President Vladimir Putin to discuss Ukraine in August.  As China’s domestic market becomes more saturated and competitive, its companies are increasingly looking to expand internationally to unlock new growth opportunities and strengthen their position in the global economy.

US CPI increases for the month

In July 2025, CPI in the US rose by a modest 0.2% month-on-month (m/m) and 2.7% year-on-year (y/y), according to the Bureau of Labor Statistics (BLS). Excluding food and energy costs, core CPI increased by 0.3% m/m and 3.1% y/y, marginally above expectations for 0.3% and 3% growth, respectively. US Federal Reserve (Fed) officials typically view core inflation as a more reliable indicator of long-term price trends. Notably, monthly core CPI gained the most since January, while the annual rate reached its highest level since February.

Source: US Bureau of Labour Statistics

The increase in headline CPI was largely driven by higher shelter costs, while food prices remained unchanged and energy prices declined by 1.1%. The impact of President Trump’s tariffs was generally modest, and investors have become more confident of potential interest rate cuts. Prices of new vehicles – typically sensitive to tariffs – held steady, but those of used cars and trucks increased by 0.5%. Transportation and medical care services both rose by 0.8%. Following the report, stock markets posted strong gains, although moves in Treasury yields were mixed. Traders raised their expectations that the US Fed would begin cutting rates again in September. Tariff effects were noticeable in several categories.

The release of the CPI report came at a pivotal moment for both the US economy and the BLS, which has recently faced criticism from President Trump. He accused the agency of political bias following a weaker-than-expected July nonfarm payrolls report and subsequently dismissed BLS Commissioner Erika McEntarfer over the July jobs report. He announced that E.J. Antoni – a known critic of the bureau – would replace her.

China’s outbound direct investment

As China’s domestic market becomes more saturated and competitive, companies are increasingly looking to expand internationally to unlock new growth opportunities and strengthen their position in the global economy. This shift is also influenced by the slowdown in China’s economic growth. The changing landscape of globalisation and regional development underscores the need for diversified market strategies and reduced dependence on any single geographic area.

According to data from China’s Ministry of Commerce (MOFCOM) and the State Administration of Foreign Exchange (SAFE), China’s outbound direct investment (ODI) declined by 4.5% y/y in the first seven months of 2025, reaching 665.71 billion yuan (US$92.74 billion). In that period, Chinese investors made non-financial direct investments in 7 676 overseas enterprises across 150 countries and regions, totaling 606.77 billion yuan (US$84.53 billion) – an increase of 2.2%.

Source: MOFCOM, China

Between January 2024 and July 2025, China’s monthly non-financial ODI displayed a recurring pattern of seasonal peaks, mid-year dips, and signs of recent stabilisation. The year began with relatively low investment levels – US$11.98 billion in January and a decline to US$9.08 billion in February. Activity picked up in March and April before dropping in May and June relative to the previous months. In July ODI fell again, followed by a slight recovery in August and September. The final quarter of 2024 was marked by volatility: October fell to US$9.37 billion; November rebounded to US$12.80 billion, and December surged to US$15.22 billion – the highest monthly figure of the year. This end-of-year spike probably reflects a push to finalise deals and align with annual budget cycles. The 2025 data, covering January to July, reflects a similar rhythm but with greater volatility.

China’s outbound investment is expected to remain a key element of its international strategy for the foreseeable future, supported by government initiatives, corporate drives, and rising global demand for infrastructure and capital.

For your interest

  1. Trump meets with Putin in Alaska
  • US President Donald Trump met Russian President Vladimir Putin in Alaska in August to discuss an end to the war in Ukraine.
  • Despite Trump’s assertion of “great progress”, nothing of substance was unveiled at the Alaska summit. The two leaders left the door open for another meeting, this time on Russian soil.

(Source: BBC, August 2025)

  1. UK economy grows more than expected in the second quarter
  • The UK economy expanded by a better-than-expected 0.3% in the second quarter. Economists polled by Reuters expected the country’s GDP would expand by a tepid 0.1% over the period, up from bumper growth of 0.7% in the first quarter.
  • UK Chancellor Rachel Reeves said the latest data was positive but “there is more to do to deliver an economy that works for working people”.

(Source: CNBC, August 2025)

  1. China’s factory output and retail sales slump
  • China’s industrial output grew 5.7% y/y in July, National Bureau of Statistics (NBS) data showed, the lowest reading since November 2024. This compared with a 6.8% rise in June. It missed forecasts for a 5.9% increase in a Reuters poll.
  • Retail sales, a gauge of consumption, expanded 3.7% in July, the slowest pace since December 2024, and cooled from a 4.8% rise in the previous month.

(Source: Reuters, August 2025)

  1. SA’s manufacturing production up for the month
  • Manufacturing production expanded by 1.9% y/y for June 2025. Stats SA’s latest data on manufacturing production showed an upward trend that has continued since the marginal growth in May 2025 of 0.5%.
  • The growth in manufacturing was driven largely by the food and beverages sector, which contributed 1.4 percentage points to the total of 1.9%, followed by the petroleum, chemical products, rubber and plastic products division, which contributed 0.4 of a percentage point.

(Source: Stats SA, August 2025)

  1. SA’s inflation reaches 10-month high
  • SA’s headline consumer inflation increased to 3.5% in July from 3.0% in June. This is the highest rate since September 2024, when it was 3.8%. Prices increased on average by 0.9% between June and July.
  • This acceleration was driven primarily by food and non-alcoholic beverages, and housing and utilities.

(Source: Stats SA, August 2025)

The South African job crisis deepens

According to Stats SA’s Quarterly Labour Force Survey (QLFS), the country’s unemployment rate rose to 33.2% y/y in the second quarter of 2025 from 32.9% in the first quarter, which was above the 31.9% recorded in the last quarter of 2024. Between April and June 2025, the labour force grew by 159 000 people, but only 19 000 secured jobs, leaving 140 000 unemployed. The number of discouraged job seekers dropped by 28 000, while those not economically active for other reasons remained unchanged. This caused a 0.3 percentage point increase in the unemployment rate.

Stats SA also reported that formal sector employment rose by 34 000 during the second quarter, while jobs in the informal sector declined by 19 000. The agency expressed interest in developing a statistical register for small and informal businesses to enhance the accuracy and detail of labour market data. It is currently assessing new statistical tools, including a register for informal enterprises, which would support the QLFS and improve labour market analysis. The informal sector accounted for around 3.3 million workers, representing roughly 20% of total employment. Stats SA’s data confirms that the formal sector remains the largest contributor to employment in SA, with private households and agriculture making up the remainder.

Market overview

Global overview

Developed market (DM) equities continued with their July highs into August, with the MSCI World Index ending positively at 2.61% m/m in US dollars. Emerging market (EM) stocks underperformed their DM peers in August, when the MSCI Emerging Market Index ended at 1.47% m/m in US dollars. Chinese stocks remain a key driver of EM stocks in 2025, with Chinese companies listed in Hong Kong up 26% year-to-date (YTD). The FTSE 100 posted gains of 0.92% in pound terms, a significant drop from July’s 3.96% m/m gains. The S&P 500 posted gains of 2.03% m/m in dollar terms, from July’s 2.24% m/m gains. Global property and global bonds both rebounded in August from July’s negative figures, to end in positive territory at 4.41% m/m and 1.45% m/m respectively, in US dollars. Global property posted the largest gains for the month. The Euro Stoxx 50 Index gained 0.65% m/m in August from July’s 0.45% m/m gain in euros. The Dow Jones Index continued July’s positive performance into August, gaining 3.42% m/m in US dollars. Japan’s benchmark Nikkei Index also ended the month in positive territory at 4.08% m/m in yen.

Local overview

South African equity markets delivered a sixth consecutive positive monthly return, with the FTSE/JSE All Share Index ending at 3.53% m/m in rand terms. This took the JSE’s YTD gains to 23.57%. Resources were the biggest drivers of local returns again in August, at 11.37% m/m. Gold miners were responsible for three-quarters of the JSE’s return in August. Together with their precious metal peers, the platinum miners, they have contributed more than half of the JSE’s YTD performance. Property, Financials and Cash gains continued into August at 2.80% m/m, 0.82% m/m and 0.61 m/m respectively, all in rand terms. Industrials rebounded from the negative performance in July to end August in positive territory at 1.17% m/m. The local bond market posted gains for short-, medium-, and long-term bonds. The FTSE/JSE All Bond Index ended the month positively at 0.75% m/m in rand terms. Bonds of 1-3 years were positive at 0.90% m/m along with bonds of 3-7 years at 1.05% m/m. Bonds of 7-12 years were positive at 0.90% m/m, and bonds of 12 years and above ended positively at 0.35% m/m. The rand strengthened against the US dollar and British pound by 2.20% m/m and 0.10% m/m respectively, but weakened against the euro by -0.07% m/m.

 

 

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