Global Markets Watch Cooling Inflation and Slower Growth
Global markets today are focused on how inflation and business activity are evolving across major economies, with new data from Australia, Canada, the United States, and Europe offering a clearer picture of where growth and price pressures stand as the year turns.
In Australia, the latest Consumer Price Index showed that inflation continues to cool, although it remains above the comfort zone of policymakers. Prices for everyday goods and services were 3.4% higher over the year to November 2025 compared with the same period last year. This was lower than the 3.8% increase seen in October, which signals that inflation is easing rather than accelerating. The slowdown was helped by softer price pressures across several categories, though housing costs, food and non alcoholic drinks, and transport remained the biggest contributors to higher prices over the past year. On a monthly basis, prices were flat in November in the original data, while seasonally adjusted figures showed a small increase. The trimmed mean measure, which strips out extreme price movements to give a clearer view of underlying inflation, also eased to 3.2%, down from October. This suggests that core inflation pressures are gradually cooling. Importantly, this release also marks the shift to a full monthly CPI in Australia, giving markets and households a more timely view of how prices are changing as conditions evolve.
In Canada, attention is on business activity rather than prices, with the Ivey Purchasing Managers Index highlighting a noticeable softening toward the end of 2025. Over the past six months, the trend has shifted meaningfully. During late spring and early summer, the index generally stayed above 50, reflecting steady demand, resilient purchasing activity, and relatively solid output. July and August continued to show expansion, and September delivered a sharp spike to a multi month high, suggesting a brief surge in momentum. That strength faded in October, and by November 2025 the index fell to 48.4, its first contraction reading since May. The weakness was broad, with employment slipping below the expansion line and inventories flattening, even though price pressures remained elevated. Going into today’s release, expectations lean toward a modest improvement but not a full rebound. Market forecasts point to a reading just under 50, around 49.5, which would suggest that conditions are stabilizing but not yet improving in a meaningful way.
In the United States, the focus is on the ISM Services PMI, which gives insight into the largest part of the American economy. Over the last half year, the services sector has mostly remained in expansion, though momentum has been uneven. In May 2025, the index dipped just below 50, signaling a brief stall as new orders and inventories softened. That weakness proved temporary, as the index rebounded through the summer. August and September readings moved into the low to mid 50s, marking the strongest pace of growth in several months. Business activity and new orders improved, although employment often lagged behind and at times hovered near contraction. In October and November, the services sector continued to expand, with November posting a reading of 52.6, the strongest in nine months. Price pressures also eased, suggesting some relief on the inflation front. More recent data points show a gradual loss of momentum, with readings around 54.8 in October, 54.1 in November, and about 52.5 in December. This suggests that services activity remains healthy but is no longer accelerating. For today’s release, expectations are for continued expansion at a slower pace, likely in the low 50s range around 52.0 to 53.0. Such an outcome would confirm that growth is still positive but more measured, reflecting cautious client spending, softer demand growth, and ongoing labor market adjustments.
In Europe, inflation remains close to the European Central Bank’s target, reinforcing the sense that price pressures are largely under control for now. Over the past six months, euro area inflation has hovered near 2%. In May and June 2025, flash estimates showed inflation easing toward the 2.0% to 2.2% range, helped mainly by lower energy prices, while services inflation stayed firmer. Through the summer and into early autumn, core inflation excluding energy and food held steady around 2.3% to 2.4%, pointing to persistent but manageable underlying pressures. By September and October, headline inflation was still near 2.2%, broadly matching expectations and sitting just above the ECB’s target. November continued this pattern, with a flash estimate around 2.1% to 2.2%. For today’s flash estimate, markets expect little change, with headline inflation likely to stay within the same narrow range. Core inflation is also expected to remain near 2.4%. Energy prices are no longer falling as sharply as before, but there has been no strong surge in services or goods prices either. If large economies such as Germany continue to show easing trends, the headline figure could land toward the lower end of expectations. A modest upside surprise remains possible if services or energy costs pick up, but any move is likely to be limited.
Analysis by Coach Angel
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Disclaimer: Investing is risky. Investors should study the information before making investment decisions
