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Daily Economic Update
03.09.2025US: Manufacturing activity shrinks for the sixth straight month; Trump will ask Supreme Court for expedited ruling. The ISM manufacturing PMI slightly improved to 48.7 in August from July’s 48 but remained in contraction territory for the sixth consecutive month. The continued dismal reading was driven by a sharp reduction in the production output gauge (to 47.8 from 51.4), which mostly offset the quick rebound in the new orders subcomponent (to 51.4 from 47.1). Firms continued to shed employment (43.8), for the seventh month, and the measure of prices moderated, signaling the slowest pace of price rises in six months but still elevated at 63.7. The survey highlighted that businesses were generally concerned about ongoing tariff-related uncertainty that had caused supply chain disruptions and impacted the domestic manufacturing environment. Meanwhile, President Trump vowed to file an appeal in the Supreme Court immediately (maybe today) to seek “an expedited ruling” to overturn the earlier decision by the U.S. Court of Appeals for the Federal Circuit, which had rendered his ‘reciprocal’ tariffs illegal. Trump also claimed that the stock markets on Tuesday were “down because of that” as “they want the tariffs.” With two courts already judging that Trump’s reciprocal tariffs are illegal, the odds are against Trump as he seeks a ruling from the Supreme Court. In contrast, the Supreme Court had judged in favor of Trump in recent cases, and he has appointed a majority of its judges.
Eurozone: Headline inflation ticks up in August. Consumer price inflation inched up in August reaching 2.1% y/y, slightly above July’s reading and market expectations of 2.0%. The rise in the headline rate was due to an uptick in unprocessed food prices (+5.5% y/y) and a smaller drag from lower energy costs (-1.9% y/y). Core inflation was unchanged for the fourth month in a row at 2.3%, also a touch above estimates of 2.2%. Meanwhile, services inflation, a gauge closely monitored by the ECB, came down to 3.1% y/y, the lowest level since March 2022, suggesting that domestic prices pressures are continuing to subside. August’s inflation reading reaffirms the ECB’s own projection for inflation to hover around 2% to year-end, as subdued goods inflation and falling energy prices offset still solid price growth in food and services. The ECB is widely expected to hold rates steady again for a third month running at its September meeting.
Kuwait: Non-oil private sector PMI softens in August. The non-oil, private sector PMI activity gauge moderated to 53 in August from 53.5 in July, marking its slowing rate of growth since March. While output remained in growth territory, it decelerated for the fourth consecutive month, signaling a loss of momentum in business activity. Both new orders and new export orders expanded at a slower pace during the month, reflecting softening domestic and external demand conditions. Slower growth in non-oil activity weighed on business sentiment, with firms’ 12-month outlook easing to the lowest since February. Meanwhile, employment recorded only marginal growth, with the index staying near the 50-no change level. Meanwhile, output prices grew at a slower pace, likely influenced by a softer rise in input costs.
Saudi Arabia: Business activity accelerated slightly in August. The non-oil private sector edged up to 56.4 in August from 56.3 in July, reflecting solid growth in the non-oil economy. The rate of expansion is yet to recapture its peak from January (>60), though, and is below the average for 1H25 (57.4). Output growth picked up in August from the 42-month low recorded in July, thanks to improving economic conditions, rising sales intakes, and proactive marketing efforts, according to the survey. New orders also improved on the back of an increase in export sales, helped by increased marketing efforts and demand from infrastructure projects. Employment came in at a slower but still strong pace in August, as per its performance for most of the year due to greater staffing requirements in line with the rising demand and business activity, which also led to an acceleration in purchasing activity. Overall input prices increased sharply due to higher purchasing costs, possibly linked to higher shipping costs, contributing to higher selling prices, which increased for the third consecutive month.
UAE: PMI rebounds in August on a faster expansion in output. The S&P Global PMI rose slightly in August to 53.3, up from a 49-month low of 52.9 in July. Rising activity came due to a sharper expansion in output levels, which were supported by strong consumer demand and active project pipelines. However, new orders saw their softest increase since June 2021 amid more intense competition and supply chain challenges due to regional tensions in some shipment routes. Similarly, export orders hovered near the neutral benchmark as the impact of higher US tariffs takes hold. Employment saw a marginal increase in August on growing business demand and the need to manage higher work backlogs. On the prices front, input costs accelerated for the second straight month to reach a 6-month high in August due to higher costs of raw materials and transportation, which pushed businesses to raise their output prices the second consecutive month. Businesses, however, remained optimistic about the year ahead hopeful that supportive government policies would boost growth. Meanwhile, the Dubai PMI saw a marginal increase in August, coming in at 53.6 with output expanding at the sharpest rate for seven months, underpinned by higher client sales and project activity.
Egypt: Business activity contracts further in August on lower output and new orders. Business activity in August continued to range in contraction territory, with the PMI remaining below the 50-no change level for the sixth consecutive month at 49.2 – and down slightly from 49.5 in July. Output and new orders were behind the decline, reflecting softer demand amid weak economic conditions and concerns about persistent inflation. Cost pressures were less intense in August, though, with the sub-index figure falling to its lowest level in more than four years. The lower rate of inflation in input prices, alongside a faster uplift in selling charges, helped to reduce the squeeze on margins. If this can be sustained and passed onto customers in the form of lower prices in the future, firms could see prospects improve. Egyptian non-oil companies continue to exercise caution in their purchasing habits while trying to reduce their stocks. Looking forward, the degree of optimism in the market was unchanged from July and only marginally higher than June's record low.