David McNamara: Surprise upside in global growth driven by investment, not consumption

A key driver of economic resilience has been the surge in AI-related investment

A key driver of economic resilience in the US has been the surge in AI-related investment.

In recent months, incoming macro data suggests the global economy continues to grow at a solid pace, despite the heightened uncertainty related to US trade and economic policy. Indeed, last week’s US payrolls numbers were a positive surprise, with 130,000 jobs created in January, and unemployment falling to 4.3%. However, digging a little deeper, shows a more fragile picture. 

Healthcare accounted for the vast majority of jobs gains in January, and over the past year, while other major sectors in the US like retail, manufacturing, and government have contracted. Annual benchmark revisions also saw the average monthly change of 49,000 last year revised down to just 15,000 jobs. Nevertheless, despite the clear signs of weakness in the labour market, other activity indicators suggest the US economy continues to move along robustly.