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Daily Economic Update
08.10.2025Kuwait: Real estate sales ease in September but activity in Q3 up a robust 47% y/y. Real estate sales in September came in at KD334 million (-29% m/m; +17.8% y/y), easing from August’s seven-year high (KD472mn). The pullback was largely due to a sizeable decline in the commercial sales (-60% m/m to KD95.6 million), a usually volatile segment which had seen a spike in transactions the previous month; sales here were up more than 400% y/y, though this partly reflected weakness a year ago. Residential sales, meanwhile, declined to KD 112 million (-10% m/m; -25% y/y) amid softer household demand, while investment property sales rose to KD119 million; (+19.8% m/m; +14.0% y/y). For the quarter as a whole, sales hit KD1.2 billion (+24% q/q; +47% y/y), and the performance of the real estate market over the course of the year has been good, with 9-month cumulative sales increasing by 28% over the same period in 2024 to KD 3.1 billion. The investment sector has been the standout performer this year, with sales up 60% y/y and transactions up 34% y/y. Looking ahead, we are cautiously optimistic about the outlook for the real estate market. Demand for residential, investment and commercial real estate is likely to be boosted by several factors including easing monetary policy, increased projects and business momentum and key legislative reforms in the pipeline, such as the real estate financing law, new ownership regulations for expatriates and listed companies, and moves to reclaim idle land to expand supply. The overall macroeconomic backdrop is also supportive.
Bahrain: Solid non-oil sector activity drives GDP growth of 2.5% in Q2 2025. Bahrain’s real GDP grew by 2.5% y/y in Q2 2025, supported by a strong performance in the non-oil sector, which expanded by 3.5% y/y, up from 2.2% in Q1. Meanwhile, oil sector activity contracted by 2.6% y/y, reversing a 5.3% expansion in the previous quarter, amid global market volatility and lower production. Non-oil activities accounted for 85.2% of total GDP during the quarter, underscoring their central role in Bahrain’s economic growth. Within the non-oil economy, professional, scientific, and technical services led with 12.0% y/y growth, followed by wholesale and retail trade (6.7%), real estate (4.7%), and tourism (4.6%). The real estate sector was supported by a 10.6% y/y rise in transaction values, while tourism benefited from a 16.5% surge in overnight visitors, mainly from neighboring GCC countries. Looking at the national accounts in terms of expenditures, private consumption grew by 2.8% y/y, aided by stable employment and higher retail activity, while government spending rose 2.1% y/y, reflecting increased allocations for housing, healthcare, and infrastructure. Investment expanded by 3.2% y/y, driven by ongoing development projects and a 5.4% rise in foreign direct investment (FDI) to BHD17.5 billion ($46.4 billion). Looking ahead, Bahrain’s GDP is projected to grow by 2.7% in 2025 and 3.3% in 2026, supported by a continued pickup in non-oil sector activities. However, rising global uncertainties and geopolitical tensions could weigh on the outlook.
UK: Halifax reports a drop in residential property prices in September after three consecutive monthly gains. The Halifax House Price Index showed a surprise 0.3% m/m decline in September, following three consecutive monthly increases, contrasting with the 0.5% m/m rise reported previously by Nationwide for the same period. On an annual basis, Halifax data showed price growth slowing to a 17-month low of 1.3% y/y, down from 2.0% in August, while Nationwide had reported a 2.2% gain. The divergence seems to reflect differences in lender coverage and timing of deals, though both indices point to an overall softening in housing activity. As we noted earlier, the slowdown highlights still high Bank of England policy interest rates, easing wage growth, and persistently high inflation, all of which are weighing on affordability and buyer sentiment. Looking ahead, the near-term outlook for UK house prices remains subdued, with limited room for further gains. Moreover, uncertainty surrounding the government’s upcoming Autumn Budget may be prompting additional caution among potential homebuyers.
US: Consumers’ year-ahead inflation expectations rise further and views about employment somewhat worsen. According to the monthly New York Fed survey, consumers’ year-ahead inflation expectations in September rose to a five-month high of 3.4% from 3.2% in August but remained slightly below the recent peak of 3.6% seen earlier this year. Inflation expectations were steady for a three-year horizon at 3% but ticked up for a five-year one to 3% from 2.9% in August. Consumers’ views about the labor market also deteriorated somewhat with higher expectations of losing one’s job and an overall rise in the unemployment rate over the next 12 months. However, consumers saw a higher probability of quitting jobs voluntarily in the year ahead and slightly improved chances of finding a new job over the next three months. Their views on household finances were also mixed, seeing better access to credit, lower delinquency on debt payments, and steady growth in income but with a small deterioration in the overall financial situation over the coming year. Tariffs have started to push up prices (mainly for goods) and job conditions have weakened, which we note is now being increasingly reflected in consumer views. Meanwhile, recently appointed Fed Governor Stephen Miran continued to pitch for aggressive interest rate cuts seeing the two Fed mandates as “less in tension” and policy rates in a very restrictive stance currently. On the other hand, Minneapolis Fed President Neel Kashkari (not a FOMC voting member this year) struck a more cautious tone, expecting the possibility of “a very low unemployment rate and very high inflation” if interest rate cuts are delivered “dramatically beyond what is justified”, though he supported two more cuts of 25 bps this year. For now, Miran is still an outlier in his call for a very aggressive easing in the monetary stance, while most other FOMC members remain wary of inflation rises but also acknowledge a weakening job market.
Japan: Wage growth down in August. Total cash earnings growth decelerated to 1.5% y/y in August from 3.4% in July, a far cry from consensus estimates of a 2.6% rise, while growth in contractual cash earnings softened marginally to 2% y/y, down from 2.1% in July. The overall steep deceleration was mainly driven by a 10.5% contraction in special payments (versus an expansion of 6.3% in July), which are mainly made up of volatile one-off bonuses. The results are somewhat surprising given the outcome of the annual spring wage negotiations, which saw average pay hikes of more than 5% for workers affiliated with the largest union in the country. Meanwhile, real (inflation-adjusted) wages fell for the eighth consecutive month, contracting by 1.4% y/y in August (-0.2% in July). Real wage growth is a matter closely monitored by BoJ officials, who would like to see sustained positive increases, which would increase chances for rate hikes and a further normalization of monetary policy.