Weak EM to pose downside risk to global growth and manufacturing

Emerging markets sentiment was generally week almost everywhere.

But, global manufacturing output should show an improvement in upcoming months, given the strength of the leading DM economies, the apparent signs of growth stabilization in China and brighter outlooks elsewhere in Asia (EM and Japan) for the second half of the year, says Barclays. 

This is also implied by the solid performance of the services sector, particularly in DM. The June reading of global new orders and inventories support this view, as we see continued improvement in demand (global new orders rose to -0.38 from -0.42 in May) alongside additional (although moderate) destocking.

That being said, the weakness in EM poses a non-negligible downside risk to global growth and the manufacturing sector recovery.