Weekly Economic Outlook: July 28-August 03, 2025
- Remin Francis I R
- Aug 4
- 2 min read
As we wrap up another week, let’s dive into some of the key economic developments both at home and abroad.
In India, industrial production showed a modest 1.5% year-on-year growth in June 2025, which, although an improvement from the 1.2% growth in May, still fell short of expectations for a 2% increase. This slower growth marks the lowest expansion since August 2024, with manufacturing output driving most of the gains (3.9% vs 3.2% in May). On the flip side, the mining and electricity sectors faced declines, with mining contracting by 8.7%, potentially due to monsoon-related disruptions, and electricity output decreasing by 2.6%, reflecting weaker industrial demand.
Following the job openings data for June, the more current nonfarm payrolls report for July in the United States showed only a modest increase of 73,000 jobs, well below the expected 110,000. This was a significant drop from June’s number, which was revised down to just 14,000. The data suggests that the U.S. labour market may be cooling faster than anticipated, with sectors like healthcare seeing gains, while others like construction and manufacturing remained relatively flat. The unemployment rate also ticked up slightly to 4.2%.
Across the Atlantic, the Eurozone showed a slight slowdown, with GDP growing 1.4% year-on-year in Q2 2025, just shy of the 1.5% growth in Q1. A deeper look revealed a sluggish quarter-on-quarter growth of only 0.1%. The slowdown, especially in major economies like Germany and Italy, is partly due to trade uncertainties, including the ongoing tariff discussions with the U.S.
In Japan, the Bank of Japan kept its short-term rate steady at 0.5% for July 2025, reflecting caution amidst a fragile recovery. Consumer confidence also dipped, reflecting a more cautious outlook among households.
India’s manufacturing sector continues to show resilience, with the HSBC India Manufacturing PMI for July 2025 remaining strong at 59.1, slightly up from 58.4 in June. This indicates that demand conditions are robust, although job creation in the sector slowed down slightly.
This week, all eyes will be on the RBI's interest rate decision. With ongoing global trade tensions and the U.S. tariff issues, it’s less likely we’ll see another rate cut from the central bank. The RBI will likely remain cautious, balancing domestic growth concerns with the uncertainty brought about by external trade dynamics.
Finally, in the foreign exchange space, India’s forex reserves rose marginally to $698.19 billion as of 25th July, continuing to hover near the record levels seen last year. This is a positive sign, reflecting the country’s strong balance of payments position.
As we head into the next week, global trade tensions, particularly the U.S. tariffs, will likely remain a key focus. India’s manufacturing strength offers a positive outlook, but there’s still much to monitor. For now, the mixed signals suggest a "wait-and-see" approach for investors, with a focus on domestic consumption stories over sectors heavily exposed to global trade.
Stay tuned for more updates next week!
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