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Daily Economic Update
07.12.2025
UAE: PMI hits a nine-month high in November; major VAT law amendments effective January 2026. The PMI non-oil activity gauge hit a nine-month high of 54.8 in November, up from 53.8 in October, signaling robust growth momentum. The output balance surged to an 11-month high amid a strong increase in sales while new business orders rose to their highest since January. Moreover, employment growth was the quickest in 18 months, which was consistent with the sharp increase in the backlogs of work and an improvement in output expectations over the coming year. However, input price pressures intensified in November, marking the fastest rise in overall input costs in 14 months due to a sharp rise in staffing costs while the increase in raw material and transportation costs was softer. Output prices increased for the fifth consecutive month (albeit at a still moderate pace) in response to higher demand and input costs. In Dubai meanwhile, the PMI held steady at 54.5, helped by strong output levels. Meanwhile, the Ministry of Finance announced changes to the Value Added Tax framework, which are set to take effect on January 1, 2026. Key updates include the elimination of the requirements for businesses to issue self-invoices under the reverse charge mechanism. The updates also include setting a five-year deadline that has been established for claiming refundable VAT, and granting the Federal Tax Authority the power needed to deny input-tax deductions linked to tax-evasion schemes. These changes aim at reducing administrative burdens on businesses while placing greater responsibility on them to verify the legitimacy of transactions, which would help in raising fairness, streamlining the audit processes, and reinforcing shared accountability across supply chains.
US: September core PCE inflation ticks down, weekly jobless claims fall to an over three-year low. September data showed that PCE inflation inched up to the highest level since April 2024 at 2.8% y/y from 2.7% in August but core inflation ticked down to 2.8% from August’s 2.9%, marking the first slowdown in five months. On a monthly basis, core prices increased at a steady rate of 0.2% for the third consecutive month, indicating early signs of stabilization in the Fed’s preferred inflation gauge. Meanwhile, initial weekly jobless claims (w/e November 29) fell to the lowest in over three years to 191K from 218K the previous week. This coincided with the Thanksgiving holiday, which most likely impacted the claims number. Continuing claims dropped slightly to 1.94mn (w/e November 22), a seven-week low but still elevated overall. Weekly jobless claims tend to be volatile around this time of the year, therefore we can’t read too much into this. Overall, claims have been rangebound so far this year aside from a few outliers, underscoring a current low-firing scenario amid decreased hiring activity. The latest economic prints are unlikely to have much impact on Fed members ahead of the FOMC meeting later this week, at which the market expects the bank to cut the interest rates by 25 bps.
Eurozone: Retail sales flat in October; Q3 GDP growth revised higher to 0.3% q/q. Retail trade volumes were flat month-on-month in October, following an upwardly revised 0.1% uptick in September. The October outcome reflected mixed sector performance: food, drink & tobacco sales edged up 0.3% m/m, while non-food products (excluding automotive fuel) dropped 0.2%, and automotive fuel sales increased by 0.3%. On an annual basis, retail sales grew 1.5%, accelerating from 1.2% in September and exceeding market forecasts of 1.3%. Meanwhile, in the final estimate, the Eurozone’s Q3 GDP growth was revised higher to 0.3% q/q (from 0.2%), accelerating from 0.1% in Q2.
Japan: Household spending very weak in October, falling for the first time in six months. Real household spending fell 3% y/y (-3.5% m/m) in October, well below consensus estimates of a 1% rise and September’s +1.8%. The 3% fall represents the steepest decrease in 22 months, driven by a 9.2% drop in transportation and communication spending and a 9.1% fall in housing spending. The fall also is the first decrease in six months, with an Internal Affairs Ministry official saying it is “unclear” if the decrease was an anomaly or indicative of an overall trend. This steep decline in household spending should be among the discussed items when the BoJ meets next week.
UK: Halifax data shows stable UK residential property prices in November. The Halifax house price index was unchanged on a monthly basis in November, while annual growth slowed to the lowest since March 2024 at 0.7% in November, down from 1.9% in October. Another measure of UK property prices, the Nationwide housing price index, previously reported different figures for the month but the y/y softening trend was largely similar. The outlook for the UK housing market continues to be cautious amid weak employment and moderating wage growth but further possible Bank of England’s policy rate cuts may support activity.