UAE non-oil foreign trade rises to AED 3tn in 2024

Full-year figures for the value of UAE foreign non-oil trade rose to AED 3tn in 2024, a rise of 14.6% compared to 2023. Non-oil exports rose 27.6% to reach a value of AED 561m. The latest figures suggest that the UAE is well on its way to achieving the target of AED 4tn in annual non-oil foreign trade by 2031, as part of the “We the UAE 2031” plan. The UAE continues to prioritize the development of trade as an engine of growth for the economy, as evidenced by the wide range of Comprehensive Economic Partnership Agreements (CEPA) the UAE has sought to negotiate in recent years.

The ISM services index, a measure of activity at service sector companies, fell to a value of 52.8 in January from 54 in December. The new orders and business activities subcomponents both declined on the month, although they nonetheless remained well above the neutral-50 mark separating expansion from contraction. The new orders index, in particular, fell to its lowest value in seven months. Although the prices paid component fell to a value of 60.4 in January from 64.4 in December, commentary from several companies pointed to concerns that even the threat of tariffs might cause prices to rise.

The US trade deficit widened to USD 98.4bn in December, from a deficit of USD 78.9bn in November, representing a 25% increase. The outturn was marginally larger than consensus expectations for a USD 96.8bn deficit, with the large increase on the month driven by a rise in imports as companies and consumers secured imports ahead of tariffs being imposed. The full-year trade deficit for 2024 amounted USD 918.4bn and was the second largest on record. Trade deficits with both Mexico and China widened in full-year 2024 data, while the deficit with Canada narrowed.

The ADP measure of US private payrolls rose 183k in January, up from the 150k that had been expected and above the 176k recorded in December. Services sectors saw the largest gains in employment on the month, with the trade, transportation and utilities sectors adding 56k and leisure and hospitality adding 54k. The manufacturing sector, in contrast, saw declines of 13k. The nonfarm payrolls report is due to be published on Friday and is expected to show a 150k rise in payrolls in January.

Today’s Economic Data and Events

• 11:00 GE factory orders Dec: forecast 2% m/m
• 16:00 BoE bank rate: forecast 4.5%
• 17:30 US initial jobless claims w/e 1 Feb: forecast 213k

Fixed Income

• US treasury yields fell on Wednesday, responding to softer IS services data. The 2yr UST yield fell 3bps to close at 4.1868%, while the 10yr UST yield declined by 10bps to reach 4.4181%.
• There were also declined in bond yields across major European markets. The 10yr Gilt yield fell almost 9bps to reach 4.435%, while the 10yr Bund declined by 3bps to 2.362%.

FX

• The US dollar spot index fell back on Wednesday, as concerns about an imminent trade war continue to fade, falling a further 0.4%. EURUSD and GBPUSD both gained 0.2% o the day to reach 1.0403 and 1.2505, respectively. USDJPY fell 1.1% to 152.61 as stronger wage data strengthened the possibility of further rate hikes by the BoJ.
• There were also further gains for commodity currencies against the dollar. USDCAD ended the day 0.1% lower at 1.431, AUSUSD rose 0.5% to 0.6285 and NZDUSD gained 0.65% to 0.5688.

Equities

• US equity markets advanced on Wednesday, despite weaker-than-expected results from tech-firms Alphabet Inc and AMD. The Dow Jones rose 0.7%, the S&P 500 gained 0.4% and the NASDAQ increased by 0.2%.
• Moves in European markets were also generally positive, with positive earnings results from several banks and pharma heavy-weight Novo Nordisk. The Eurostoxx 50 gained 0.12%, the DAX rose 0.4% and the FTSE 100 increased by 0.6%. The CAC 40 was the outlier, dropping 0.2%.
• There was little movement in local markets on Wednesday, with the DFMGI unchanged and the ADX down just 0.09%. The Tadawul fell 0.16%.

Commodities

• Oil futures fell sharply on Wednesday. A report by the EIA pointed to a 8.66m barrel rise in crude inventories last week. Brent futures were 2.1% lower at USD 74.61/b, while WTI fell 2.3% to USD 71.03/b.