UAE GDP grows 3.9% y/y in Q1 2025

A preliminary estimate for Q1 2025 UAE GDP points to real growth of 3.9% y/y. Non-oil growth continues to make a significant contribution, accounting for 77% of GDP, highlighting the continued diversification of the economy. Non-oil GDP grew at a pace of 5.2% y/y. The manufacturing sector saw notable growth, expanding at a pace of 7.7% y/y, while the finance and insurance and construction sectors both saw 7% growth y/y.

US nonfarm payrolls rose by just 22k in August, markedly weaker than consensus expectation for a 75k gain. While there was a slight upward revision to the July figure, an amendment to the June print showed the first fall in employment since 2020, with the measure dropping 13k. There were declines in both the manufacturing and retail and wholesale trade sectors, suggesting that tariffs may be having an impact on employment in these sectors. The unemployment rate rose to 4.3%.

OPEC+ has agreed to raise oil market output again in October, with 137k b/d to be added. This is a substantial step down from the 547k b/d due to be added in September and marks a more gradual path of returning barrels to the market.
The higher volume from OPEC+ will contribute to a meaningful increase in oil inventories in the remainder of the year and into 2026, amid modest demand conditions. We expect oil prices will remain around USD 65/b for the rest of 2025 with prices likely to test lower in 2026.

President Trump on Friday signed an executive order, exempting tariffs on graphite, tungsten, uranium, gold bullion and a variety of other metals. This exemption may speed up the process of concluding ongoing trade negotiations. The president separately threatened further tariffs on the European Union, following the European Commission’s decision to fine Google € 3bn. The fine was issued for giving Google’s own advertising exchanges an unfair advantage.

The volume of UK retail sales rose 0.6% m/m in July, beating expectations for a 0.2% gain. While the July print points to momentum going into the third quarter, some of the July growth was likely driven by one-offs, including the women’s football Euro tournament. Speculation about the need to raise taxes in the upcoming Autumn Statement may also dent household spending.

German factory orders slumped in July, declining 2.9% m/m. The decline was the biggest since January and marked the third consecutive fall. The deterioration was driven by large-scale orders.

Today’s Economic Data and Events

10:00 GE industrial production (Jul). Forecast: 1% m/m

Fixed Income

• US Treasuries rallied on Friday, following weaker-than-expected nonfarm payrolls data. The 2yr yield declined 8bps on the day to reach 3.5092%, leaving the yield 11bps weaker over the course of the week. The 10yr yield declined 9bps during the session, and 15bps on a week-on-week basis, to reach 4.0742%.
• There were broad-based declines in European bond yields on Friday. The 10yr Gilt fell 8bps to 4.643%.

FX

• The dollar fell against a basket of peer currencies on Friday, as jobs data cemented expectations of a September rate cut, with the spot index declining 0.6%. EURUSD gained 0.6% to 1.1717, GBPUSD rose 0.55% to 1.350 and USDJPY fell 0.7% to 147.43
• In emerging markets, USDTRY rose 0.2% to 41.2362, USDINR gained 0.13% to 88.2663, and USDZAR fell 1% to 17.59

Equities

• US equity markets declined on Friday despite rising rate-cut optimism, led by falls in Nvidia and other megacap technology stocks. The Dow Jones fell 0.5% on the day, ending the week 0.3% lower. The S&P 500 dropped 0.3% over the course of the session but still managed to end the week 0.3% higher. The NASDAQ fell by a marginal 0.03% on the day and ended the week 1.1% higher.
• European equity markets ended the day lower on Friday. The Eurostoxx 50 fell 0.5%, the FTSE 100 declined 0.1%, the CAC 40 declined by 0.3% and the DAX dropped 0.7%.
• Locally, the DFM rose 0.25%, while the ADX declined by 0.13%.

Commodities

• Oil prices dropped on Friday, amid speculation that OPEC+ would announce further production increases over the weekend. Brent futures declined 2.2% to USD 65.5/b. and WTI dropped 2.5% to 61.87/b.
• Oil prices have risen in early morning trade.
• Gold prices rose 1.2% to 3,586.69 /troy oz.