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Daily Economic Update
11.06.2025Kuwait: Real estate sales hit a five-month high in May. After a soft few months, real estate sales perked up in May, with total sales climbing to KD367 million—the highest monthly figure since December 2024. This marks a strong 28% m/m rebound, though yearly sales dipped slightly by 1.2% due to a high base in the commercial segment recorded last year. The residential sector logged its strongest month since October 2024 with sales rising to KD159 million, up by 18% y/y underpinned by a 32% y/y surge in transaction volumes. Investment sales also surged to KD186 million, jumping 159% from a weak base last year. However, commercial sales remained weak, plunging 87% y/y. In the first five months of 2025, total real estate sales grew 17% y/y—up from a smaller increase of 6% in the same period of 2024—driven chiefly by a near-doubling in investment sales and a steady rebound in residential demand. Transaction volumes across all segments rose 31% y/y, signaling increased market demand. Overall, these data point to a recovery in real estate market activity in Q2 after a weak Q1 – the latter we had suspected was affected by seasonal factors. We expect this improved performance to be maintained through H2 2025, shaped by the interest rate trajectory, regulatory developments and steady growth in the non-oil economy, potentially pushing overall sales levels to among its strongest levels of recent years.
Saudi Arabia: Industrial production growth eases in April. Industrial production growth in April eased to 3.1% y/y from 3.4% in March. Slower growth came mainly due to a slowing in non-oil activities, which eased to 0.1% y/y from 4.9% in March. This decline came mainly due to a fall in the production of food products (-2.8% y/y versus 0.7% in March), basic metals (-14.1% versus -6.3%), and slower growth in chemicals (9.2 versus 14.8%). On the other side, growth in the oil sector, which has about 75% of the index’s weight, rose to 4.3% y/y, up from a 2.8% increase in the previous month. The increase within this segment came mainly from refining activities, which saw a jump of 23% y/y in April. The outlook for the remainder of 2025 remains optimistic with the expected increase in oil production and the projected non-oil robust growth.
US: A trade framework with China agreed, while a federal court extends ‘reciprocal’ tariffs for now. The US and China agreed on a trade framework yesterday following two days of talks between authorities that should see some resolution to current frictions related to China’s curbs on the flow of rare earth minerals and US restrictions on exports of some semiconductor and other sensitive goods. However, details are as yet too unclear to assess the durability of the latest trade truce after an initial agreement last month. As a next step, the presidents of both countries would need to approve the framework before its implementation. Meanwhile, the US Court of Appeals for the Federal Circuit extended the initial reprieve it gave earlier on an order issued by a trade court about blocking Trump’s sweeping tariffs enacted under an emergency power act. The federal court has put the case on a fast-track basis and scheduled arguments for July 31. In all likelihood, the case would ultimately end up with the Supreme Court for a final verdict. However, sectoral tariffs on metal and auto goods, along with other sectors in consideration, would remain as they are issued through a different administrative mechanism. Even if there is a legal setback for Trump on his ‘reciprocal’ tariffs, the US administration could still use separate means to impose steep levies on most goods. The market reaction varied following such developments, with US equity futures in the red this morning but Chinese and many other Asian stock markets in the green.
UK: Labor data weak as payrolls extend drops and unemployment rate climbs, but wage growth still elevated. UK payrolls (based on employment tax records) fell for the seventh straight month, down by 109K in May, following a drop of 55K (worse than the first estimate of a 33K decline) in April, according to the preliminary data from the ONS. However, provisional payroll figures tend to see significant revisions in subsequent months, and therefore May’s numbers may also be subject to sharp revisions in the coming period. The unemployment rate climbed to a near four-year high of 4.6% in Feb-Apr from 4.5% in Jan-Mar. Wage growth eased but remained elevated, with regular pay growth (excluding bonuses) in Feb-Apr the lowest since Aug-Oct 2024 at 5.2% y/y from 5.5% in Jan-Mar and total pay growth (including bonuses) down to 5.3% from 5.6%, respectively, as wage rises in the private sector continued to soften. Encouragingly, the inactivity level among the working age population has been on a declining trend, now around a two-year low, implying further moderations in wage pressure ahead. Meanwhile, vacancies dropped further to 736K in Mar-May from 760K in Feb-Apr, a four-year low. Overall, weak employment data, especially softening wage pressure, amid ongoing global trade uncertainty may encourage the BoE to continue with its easing monetary policies, with markets pricing-in two 25 bps interest rate cuts by the end of 2025 and the next move seen at the bank’s August or September meeting.
Japan: Producer price growth slows to an eight-month low in May. The producer price index (PPI) rose by 3.2% y/y in May, marking the slowest pace of wholesale inflation since September 2024 and signaling a potential easing of price pressures. Softer price growth was supported by a continued decline in import prices, which saw a steeper yearly drop for the fourth straight month in May at -10.3% y/y, reflecting the recent appreciation of the yen and lower costs for key inputs such as steel and chemicals. However, the strong increase in the food segment within the PPI index — up by 4.2% y/y — underscores some ongoing domestic cost pressures. As the PPI often serves as a leading indicator for consumer inflation, this moderation may suggest that the pace of consumer price rises could begin to ease in the coming months. Consumer price inflation is currently hovering around 3.5%, well above the Bank of Japan’s 2% target, and the latest PPI figures offer cautious optimism that inflation momentum may be losing steam — potentially affording the central bank greater flexibility in recalibrating its monetary policy stance.