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Daily Economic Update
09.11.2025
Kuwait: Card spending declines further in Q3, official data shows. Growth in card spending (local) turned more negative in Q3 2025, declining by 6.7% y/y (-3.3% q/q) to KD10.4 billion from -5.9% y/y (+2.8% q/q) the previous quarter, according to data provided by the Central Bank of Kuwait. While the q/q slowdown follows the seasonal pattern, with local spending falling and overseas spending rising (+38% q/q) as consumers embark on their summer travels, the decline in the annual rate appears to have come against the grain after two consecutive quarters of less negative growth. Growth in the value of card transactions, which is treated as a rough proxy for consumer spending, turned negative in both nominal and real (inflation-adjusted) terms, bucking the trend witnessed across other indicators that we typically track to gauge wider economic activity, such as the purchasing managers’ index, credit growth, real estate sales and of course non-oil GDP, all of which have broadly improved compared to 2024. The readings from consumer confidence surveys back up anecdotal evidence suggesting that consumers have been more cautious about spending this year due to uncertainty about their income, employment and general economic prospects, though of course this may not fully explain the negative card spending trend.
US: Latest Fed speak highlights uncertainty about a December rate cut; some initial progress in ending the government shutdown. Fed officials further displayed diverging views about the outlook for inflation and employment. Governor Philip Jefferson pitched “to proceed slowly as we approach the neutral [interest] rate” but didn’t specify his preference for the December interest rate move. St. Louis Fed President Alberto Musalem (an FOMC voting member) saw the labor market “around full employment,” but also acknowledged some downside risks. Cleveland Fed President Beth Hammack (an alternate voting member) supported keeping monetary policy "on the restrictive side of neutral," emphasizing elevated inflationary pressures. For now, the futures market continues to signal around a two-thirds probability for an interest rate cut in December. Meanwhile, there seems to be some progress on ending the ongoing government shutdown as Senate majority leader John Thume confirmed having bipartisan talks on ending the deadlock, with negotiations amongst lawmakers ongoing as pressure continues to build on both parties to resolve the gridlock.
UK: BoE maintains policy rate at 4% in a dovish vote, raising the likelihood of a cut in December. The Bank of England (BoE) held the bank rate steady at 4% in a 5-4 vote, with four MPC members voting to reduce rates by 25 bps. The MPC statement noted “CPI inflation is judged to have peaked” and “if progress on disinflation continues, the Bank Rate is likely to continue on a gradual downward path.” Meeting minutes also signaled that the BoE Governor Andrew Bailey casted the decisive vote to keep the bank rate on hold despite having rather accommodative views as he awaits to see the confirmed durability of disinflation progress. In the latest economic projections, the bank upgraded the 2025 GDP growth forecast to 1.5% from 1.25% earlier, mostly reflecting upward revisions to prior quarters’ GDP data, but kept growth estimates for 2026 unchanged at 1.25%. It continues to see inflation gradually returning to its 2% goal by Q2 2027. The bank also emphasized that uncertainty ahead of the government Autumn Budget appeared to be weighing on underlying activity. Given a narrow vote split on maintaining the policy rate, Governor Bailey likely willing to join other MPC doves, and a muted economic landscape, an interest rate cut in December seems firmly on the table. Moreover, the upcoming budget on November 26, which is expected to unveil fresh fiscal consolidation measures, may elevate the need for a more supportive monetary policy in the near term. The futures market now indicates around 60% chance for a 25-bps interest rate cut at the December meeting.
Eurozone: Retail sales slip again in September, underscoring fragile consumer demand. Retail sales volumes in the Eurozone declined by 0.1% m/m in September, marking the third consecutive month of contraction or stagnation and falling short of market expectations for a modest rebound (+0.2%). The weakness was driven by a 1.0% m/m drop in automotive fuel sales and a 0.2% decline in non-food products, while food, drinks, and tobacco sales remained flat. Among major economies, retail sales rose in Germany (+0.2%) and Spain (+0.4%) but fell in Italy (-0.6%) and France (-0.1%). On an annual basis, retail sales growth moderated for the third straight month, down to +1.0% in September (1.6% in August), from a recent peak of 3.6% in June.
Japan: Household spending growth disappoints in September but remains positive. Real (inflation-adjusted) household spending rose 1.8% y/y in September, weaker than both August’s 2.3% increase and consensus estimates of 2.5% growth. Despite that, growth remained positive for a fifth consecutive month, driven by a 11.5% increase in transportation & communication spending and a 12.3% increase in durable goods spending. The growth in household spending occurred despite real (inflation-adjusted) cash earnings declining 1.9% y/y in September, highlighting a disconnect between the two as the Bank of Japan (BoJ) struggles to control inflation, which has been above the BoJ’s 2% for over three years. Going forward, the BoJ expects household spending to remain “more or less flat” in 2025, reflecting muted corporate profits and high inflation.
China: Inflation higher than expected in October but exports much weaker. Consumer price inflation rose to 0.2% y/y in October, slightly above expectations of 0% and marking a tentative exit from deflation after a 0.3% decline in September. Core inflation edged up to 1.2% y/y (from 1.0% the month before), the highest in 20 months, driven by modest gains in healthcare, education, and housing. On the trade front, exports unexpectedly fell 1.1% y/y in October, reversing September’s 8.3% surge, as shipments to the US plunged 25%, reflecting persistent trade frictions despite the recent tariff rollback agreement between Presidents Xi and Trump. Meanwhile, imports rose 1.0%, supported by resilient demand for raw materials and consumer goods, but slowed significantly from 7.4% in the prior month. The recent data underscores the dual challenge facing Beijing: reviving domestic demand while navigating volatile external conditions; weak global demand and structural deflation could weigh on fourth-quarter growth.