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Daily Economic Update
17.09.2025US: Retail sales grow robustly, beating forecasts, showing no signs of consumer pullback. Retail sales in August rose by a higher-than-expected 0.6% m/m (3.5% y/y) from an upwardly revised increase of 0.6% (4.4% y/y) in July, showing a robust across-the-board performance. Growth in a narrow measure of sales (excluding food services, auto, gasoline stores and building materials) also accelerated to an above consensus 0.7% m/m from 0.5% in July. Despite a slowing labor market, a strong wealth effect given record-high stock market and ongoing elevated property prices is helping consumer spending remain strong. If inflation continues to rise and/or the labor market continues to soften, momentum could still slow over coming months. Nonetheless, two back-to-back solid increases in household spending during the current quarter mean that the US economy is well on track to post strong growth in Q3, soothing downturn worries. Meanwhile, industrial production in August rebounded, albeit by a modest 0.1% m/m (0.9% y/y) increase following July’s drop of 0.4% (+1.3% y/y), suppressed by an outsized fall in utility output (-2% m/m) which partially offset a 0.2% rise in manufacturing.
UK: In line labor market prints underscore a gradual loosening. UK payrolls (based on employment tax records) fell for the seventh straight month, by 8K in August after dropping 6K in July, taking the cumulative fall to 150K (a 0.5% decrease in total jobs) since July 2024. However, encouragingly, the pace of payroll declines has eased in the past two months, suggesting early signs of stabilization. The unemployment rate was also unchanged at 4.7% (a near four-year high) in May-July, for the third consecutive rolling three-month period, with the participation rate steady at 63.8%, its highest since the start of the pandemic. Meanwhile, regular wage growth slowed, hitting the lowest level since March-May 2022, to 4.8% y/y in May-July from 5% in the preceding three months. However, total pay (including bonuses) rose slightly to 4.7% from 4.6%. Job vacancies ticked up to 728K in June-August from 720K in the previous three months, but the overall trend has remained downward. The latest labor prints are unlikely to sway the MPC monetary policy decision (due this Thursday) given expectations of higher consumer price inflation over the coming months, with the market mostly projecting no further interest rate cuts this year.
Eurozone: Industrial production increases in July after June’s slump. Industrial production rose by 0.3% m/m in July, slightly lower than expectations of a 0.4% rise, but June’s reading was revised strongly higher (to -0.6% m/m from -1.3%). On a year-over-year basis, industrial production increased by 1.8% in July, accelerating from June’s 0.7% rise, a sixth straight month of growth and following a decrease in 2024. The stronger performance in July was driven by improvements in capital goods (+1.3% m/m in July vs -0.8% in June) and in both durable (+1.1% vs -0.5%) and non-durable (+1.5% vs -4.2%) consumer goods.
Oil: IEA walks back on its “no new investment in upstream projects” forecast. The International Energy Agency (IEA), in its “Implications of oil and gas fields decline rates” report, rowed back on the scenario presented in its “Net Zero by 2050” report, which saw no need for new long-lead investments in oil and gas projects due to declines in oil demand. Triggering the shift was the agency’s observation that decline rates in current fields had risen more than expected since 2000 due to the increasing share of unconventional and offshore output in total oil and gas production. Indeed, 90% of annual upstream oil and gas investment since 2019 has been focused on offsetting production declines rather than to meet demand growth, according to IEA data. Though the agency sees oil demand peaking by the end of the decade in its baseline scenario amid increased electrification and other efficiencies, this revised outlook implies greater need for new investments in the upstream sector given the large capital and long lead-times needed to bring production online. In a hypothetical scenario where all capital investments were to stop, global oil supply is expected to drop by 5.5 mb/d annually, which is equivalent to the oil output from Brazil and Norway combined. In such a scenario, oil production would be mostly concentrated in the Middle East and Russia, where the decline rates in conventional, supergiant oil fields are slower than elsewhere. The shift in the agency’s outlook highlights an important theme in energy security, where typically demand for energy continues to rise even for fossil fuel-based primary energy sources that have been utilized for decades, such as coal, which hit an all-time high in 2024; further investment in upstream projects would therefore be critical to ensure global energy security.
UAE: Dubai inflation slows to 2.4% in August on easing housing price rises. Consumer price inflation in Dubai eased to 2.4% y/y (0.1% m/m) in August from 2.9% in July, slowing for the first time since May. The moderation was driven by easing gains in the housing & utilities category, the largest by weight in the index, in which price growth dropped to a two-year low of 6.0% y/y. The expectation here is that it should continue to soften due to a pick-up in housing supply. Meanwhile, prices in the foods & beverages and transportation categories declined, by 0.4% y/y and 3.5% y/y, respectively, the former falling into deflation for the first time since April and the latter remaining in deflation for a thirteenth consecutive month. Lower fuel prices have been a major deflationary impulse in the transport category.
Egypt: Government to offer Red Sea land plots to raise more than $3bn. The Egyptian government is offering 14 plots of land of varying sizes in the Red Sea Governorate in the east of the country to the private sector, aiming to raise more than EGP 150bn (approximately $3bn). The land offering aims to attract tourism, service, and industrial projects, which will provide approximately 5,000 job opportunities. This step comes at a time of accelerating investment in the region. Emaar Misr and Golden Coast Tourism announced an EGP 900bn ($18.5bn) investment to establish the Marassi Red Sea Edition project last week. These measures reflect a government drive to reevaluate and manage real estate assets on the Mediterranean and Red Sea coasts, as part of efforts to regulate the market and maximize state revenues from tourism and real estate projects. Egypt aims to attract $42bn in foreign direct investments during the fiscal year ending June 2026, relying primarily on capital from Gulf countries, particularly Saudi Arabia, Kuwait, and Qatar.