The Federal Reserve left interest rates unchanged at its latest FOMC meeting as had been widely expected by the market. More focus was on what language the Fed used to describe the soft performance of the US economy in Q1, which it described as 'transitory'. This sends as good a signal as any that the Fed is keeping the June meeting live for another rate move even if it contends with a few months of soft employment numbers, as are expected out later this week. The Fed's major concern remains inflation, noting that core inflation figures remain "somewhat below 2%" and they indeed struggled in recent months with the PCE inflation rate at 1.6% in its latest reading. Meanwhile the ISM services index contrasted with the performance of manufacturing in the US economy, increasing month/month to 57.5 in April.
The Emirates NBD Purchasing Managers’ Index (PMI) for the UAE was broadly unchanged in April at 56.1, compared with March’s 19-month high of 56.2. Output and new orders growth remained very strong although slightly slower than March. Slower export orders growth appears to have weighed on overall new orders expansion. Panellists cited new projects, stronger underlying demand and improved economic conditions as supporting output and new orders growth in April. The Emirates NBD Saudi Arabia Purchasing Managers’ Index (PMI) rose marginally to 56.5 in April from 56.4 in March, signaling continued strong growth in the non-oil private sector last month. Both output and new orders increased at a slightly faster rate in April, despite a marginal decline in new export orders. Firms faced lower foreign demand and increased competition in external markets in April, according to the survey.
The latest Purchasing Managers’ Index (PMI) for Egypt suggests that while the non-oil private sector economy continues to contract, it is doing so at a slower rate. The headline PMI rose to a 9-month high of 47.4 in April, as output, new orders and employment declined at a slower rate on average last month.