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Daily Economic Update
05.11.2025
Egypt: Business activity in October sees softer pace of contraction. Egypt’s non-oil private sector saw a slight improvement in operating conditions in October, with the PMI edging up to 49.2 from 48.8 in September, marking a milder pace of contraction. New orders and output fell at the slowest pace in eight months, while purchasing activity and employment were broadly stable. Cost pressures remained elevated, driven by faster wage inflation, which rose for the third consecutive month to its highest level in five years as firms responded to rising living costs. Despite higher wage-driven expenses, businesses continued to show resilience. Importantly, sentiment improved, with firms more optimistic about demand and domestic economic conditions heading into year-end, although expectations remain below the long-term average.
UAE: PMI eases in October, but remains above its summer lows. The non-oil private sector PMI edged back down in October after two successive months of increase, easing to 53.8 (September 54.2). The score is still consistent with solid non-oil activity growth and well off the summer low of 52.9, though slightly below the peak levels recorded in Q1 this year. The key output and new orders components moderated versus September, but remain more robust than the headline rate, with the orders component especially firm in the high 50s. Notably, export orders barely grew, suggesting that strong order books are being driven by the domestic economy. Meanwhile, input and output price pressures were mostly muted. Despite the broadly positive scores in the survey, there were some weak spots. Business confidence in the 12-month ahead outlook dropped sharply, reflecting some concerns about competition and profit margins. Similarly, employment virtually stagnated, weighed by skilled shortages and cost cutting. We also note that with the October drop, a wider gap has opened up between the UAE and Saudi headline PMI scores (recently the region’s two best performing economies), with the latter surging to above the 60 level as reported yesterday.
Qatar: Non-energy private sector activity eases in October as firms’ output declines. Activity in Qatar’s non-energy private sector slowed in October, with the headline PMI reading falling to a nine-month low of 50.6 from 51.5 in September, according to S&P Global. This is the second consecutive month of slower activity, with firms’ output slipping back into contraction territory (49.6) in October after September’s increase. Moreover, new orders, which have been falling in all but two months of 2025, declined at the fastest rate since January 2023. This drop in new orders (and output) appears most acute in the construction sector. In contrast, employment growth accelerated again in October – and at the third fastest rate (68.8) in the survey’s history – with manufacturing firms driving gains. Wage growth continued to be strong in October, though eased to a five-month low, with construction firms reporting the slowest increase and manufacturing firms the fastest increase – which echoes their diverging business performance. Purchase prices also continued to increase, to a six-month high, but, as has been the case every month this year except September, these costs were absorbed rather than passed onto consumers as higher output prices. Firms cited intense competitive pressures for the need to discount.
Saudi Arabia: Aramco reports lower revenues in Q3. Saudi Aramco reported its third quarter 2025 financial results, which showed a 2.2% y/y decline in net income to $27 billion, down from $27.6 billion in the same period of 2024, while revenues fell by 10% y/y to $112 billion. The decrease was attributed to reduced sales volumes, weaker refining and chemicals margins, and lower crude oil prices, with an average realized crude price of $70 versus $79 in Q3 2024. Despite the decline, Aramco maintained a strong operating cash flow of $36 billion and declared a $21.3 billion dividend. Capital expenditure eased by 4.8% y/y in Q3, but increased by 3.3% in 9M2025 in line with the company’s long-term growth strategy. Aramco advanced its gas expansion plans, aiming for an 80% increase (previously 60%) in gas production capacity by 2030, completed an $11.1 billion midstream deal at Jafurah, and invested in downstream and digital ventures, including a stake in HUMAIN to enhance its AI capabilities. In the year to September, net income fell by 10% to $76 billion while revenues declined by 8.5% to $335 billion. There was a sizeable decline in Aramco’s payments to its largest (82%) shareholder, the Saudi government, in 9M2025 with royalties and dividends down by 31% and 29% y/y, respectively, reflecting lower oil prices and revenues, and the suspension of most of the performance-linked bonus for 2025, which fell to $657mn in 9M2025 from $32bn in the same period of 2024.
UK: Reeves warns of “hard choices,” hinting at tax hikes in the Autumn budget on November 26. Chancellor Reeves, in an unusual pre-budget speech, underlined “hard choices” that she would have to make in the upcoming budget on November 26 as she vowed “to protect public services from a return to austerity.” She gave clearer signals of potential tax hikes, which, if delivered, would be a departure from the Labor Party’s pre-poll manifesto, emphasizing also on “cutting the national debt.” The projections from the Office for Budget Responsibility (OBR), to be released ahead of the budget, are set to downgrade productivity estimates, which would remove the headroom she had in the previous budget to meet the self-imposed fiscal pledge of balancing current spending and tax revenues by 2029-30. The UK economic outlook has remained uninspiring and additional blows from productivity downgrades would put further pressure on public finances over the coming years. Therefore, exploring new revenue sources has become imperative for the government if spending plans are to be left mostly untouched. UK gilts initially rallied on the government’s commitment to boost public finances but later pared gains amid lack of specific details in the Chancellor’s speech.
Japan: BoJ September meeting minutes show increased momentum for a rate hike. Minutes from the Bank of Japan’s September meeting, where members voted 7-2 to keep rates steady at 0.5%, show that members are aware of the need to raise rates, but are waiting for “a little more hard data” before doing so. Some BoJ members stated that conditions for a hike were “gradually being met” but noted that more time is needed before doing so. Governor Ueda’s recent press conference also hinted that rates may be raised sometime soon, but the market is currently not expecting a hike in the BoJ’s December meeting. Additionally, some BoJ members highlighted that they expect inflation to moderate next year, dropping from September’s 2.9% to reach the BoJ’s 2% target by the end of FY2026 as one-off factors like high food prices subside.