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Daily Economic Update
03.06.2025Kuwait: Non-oil private sector activity still solid but cools slightly in May. The non-oil private sector PMI recorded solid but moderating expansion in May, with the headline reading falling slightly to 53.9 from 54.2 in April. Growth in output and new orders slowed but remained relatively strong, helped by firms’ advertising efforts. The increase in activity also supported employment, which gained for a third consecutive month and at the joint-fastest rate in the series’ history. This was also reflected in staffing costs, which increased at the fastest pace since November 2024. Firms’ input costs recorded a further increase, with purchase prices rising for a third consecutive month. Costs were increasingly being passed onto consumers, with output prices rising at the fastest pace in almost a year. Nevertheless, business sentiment hit a one-year high, reflecting few signs of worry about the global economy, as firms appeared optimistic about domestic demand and the success of their marketing efforts.
Saudi: Private sector activity ticks up in May on rising new orders. The ongoing expansion in Saudi Arabia’s non-oil private sector picked up some momentum in May, with the headline PMI rate rising to 55.8 from 55.6 in April, according to S&P Global. The uptick was driven largely by growth in new orders (to 62.5 from 58.6) on the back of improved business confidence, with the year-ahead business outlook rising sharply to an 18-month high (to 61.3 from 55.7 in April). Output (59.8) and employment (54.1) growth eased on the previous month, though were still solidly in expansion territory. Indeed, employment growth was still ranging near 18-month highs, with firms intimating that they were increasing payroll numbers in response to higher demand and backlogs of work. On the prices front, input costs increased at a slower pace in May mainly due to softening labor costs. On the other hand, output prices shifted into deflation territory, due to competitive market conditions, with the services sector leading the reduction. This contrasts with rising prices in the manufacturing, construction and wholesale & retail sectors.Saudi: Private sector activity ticks up in May on rising new orders. The ongoing expansion in Saudi Arabia’s non-oil private sector picked up some momentum in May, with the headline PMI rate rising to 55.8 from 55.6 in April, according to S&P Global. The uptick was driven largely by growth in new orders (to 62.5 from 58.6) on the back of improved business confidence, with the year-ahead business outlook rising sharply to an 18-month high (to 61.3 from 55.7 in April). Output (59.8) and employment (54.1) growth eased on the previous month, though were still solidly in expansion territory. Indeed, employment growth was still ranging near 18-month highs, with firms intimating that they were increasing payroll numbers in response to higher demand and backlogs of work. On the prices front, input costs increased at a slower pace in May mainly due to softening labor costs. On the other hand, output prices shifted into deflation territory, due to competitive market conditions, with the services sector leading the reduction. This contrasts with rising prices in the manufacturing, construction and wholesale & retail sectors.
Egypt: Private sector contraction softens in May, but cost pressures intensifying. Private sector activity in Egypt remained in negative territory in May, though the rate of decline eased, the latest S&P Global PMI reading showed. May’s headline PMI reading of 49.5 was an improvement on April’s rate (48.5), moving closer to the 50-no change level as firms reported softer contractions in output and new orders. That said, staffing levels continued to fall and the volume of purchases declined at the fastest rate in seven months. Input price pressures intensified, however, with the price measure accelerating at the fastest pace this year (to 56.8 from 55.1 in April) as firms reported sharp increases in the cost of energy and raw materials amid “unstable” exchange rates, especially with the US dollar. Businesses increasingly passed on these higher costs to customers, evident in the uptick in output prices to a 7-month high in May (to 52.2 from 50.0 in April).
US: Slump in manufacturing activity deepens in May as per the ISM PMI. The ISM manufacturing PMI gauge weakened in May by more than forecast, to a six-month low of 48.5 from April’s 48.7, as measures of exports and imports sharply dropped to multi-year lows on tariff-related concerns. Firms continued to shed staff, while price pressures remained elevated at near their highest levels since mid-2022. The ISM survey was in stark contrast to the survey by S&P Global, which showed manufacturing activity strengthening to a three-month high of 52 in May on the final reading from 50.2 in April on tariff front-running and pauses in trade frictions. Nonethless, the uncertainty surrounding the administration’s trade and other policies would continue to drive volatile economic assessments, providing an uncertain trajectory over the coming months.
Japan: Chief trade negotiator to return to the US for another round of talks. Japan’s chief trade negotiator, Ryosei Akazawa, is expected to return to Washington coming Thursday for a new round of talks with US officials, including Treasury Secretary Scott Bessent. The upcoming negotiations follow the fourth round of ministerial-level negotiations held last week, which he described as making “progress toward an agreement.” Japan is currently facing a 25% tariff on automobiles, steel and aluminum tariffs that will soon double to 50%, and a 10% tariff on all other goods. Without a trade deal, levies are set to rise to a minimum of 24% by early July as previously announced. Meanwhile, Prime Minister Shigeru Ishiba stated that the government would look to address soaring rice prices and secure stable rice supply ahead of the summer upper house elections. Despite the release of 300,000 mt of stockpiled rice last week and earlier auctions that began in February, prices remain at record highs, straining household budgets amid persistent inflation. The ruling minority government has already been weakened by the recent general election results and currently faces growing public discontent as economic concerns take center stage in the lead-up to a critical vote.
UK: House prices rise more than forecast in May, Nationwide data shows. Residential prices in May rebounded by a more-than-expected 0.5% m/m after a drop of 0.6% in April, lifting the annual growth to 3.5% from April’s 3.4%. May’s figure is likely more pronounced given the lull in activity witnessed in April after UK property market participants front-loaded their transactions the previous month as they rushed to execute their property purchases ahead of the change in stamp duty that went into effect in April. The agency also noted that underlying conditions for prospective buyers continued to be supportive amid healthy wage growth, low unemployment, strong household balance sheets, and the possibility of further reductions in the policy interest rate by the Bank of England.