+965 2224 8361
Daily Economic Update
06.07.2025US: Trump’s tariff letters to start going out on Monday; June’s headline job growth higher-than-expected. President Trump mentioned that he signed letters specifying tariff rates for 12 countries that will be sent out on Monday, declining to name the specific countries. It was earlier mentioned that many more letters will be sent out, putting tariffs that could reach 70%, in the days running up to the July 9 deadline when the pause on the reciprocal tariffs is set to end. Meanwhile, June’s headline job growth came at a relatively strong 147K, easily beating expectations of 110K. However, underlying data was not as strong given that government jobs (+73K) accounted for half of that increase while private payrolls increased by a lower-than-expected 74K, the weakest since October, and nearly half the increase seen in April and May. One of the goals of Trump’s tariff strategy is to bring back manufacturing jobs to the US, but manufacturing jobs declined for the second straight month after being flat in April. While the unemployment rate unexpectedly ticked down to 4.1% from 4.2%, that was supported by a shrinking labor force with the participation rate edging down to 62.3% from 62.4%. Average hourly earnings increased by a lower-than-expected 0.2% m/m, putting y/y growth at 3.7%, the slowest since July 2024. Overall, June’s jobs data, along with the recent trend in weekly continuous jobless claims, which have been elevated, indicate that the US job market continues to gradually loosen. Finally, Trump signed the GOP fiscal bill into law after the House passed the Senate-amended version with no changes, which will worsen an already unsustainable debt trajectory for the US. The passage of that bill by Trump’s self-imposed deadline of 4 July, when most observers had been doubtful of that timeline, shows the strong command that Trump has over the Republican Party given that key disagreements remained between GOP congressman until the last minute, but then almost all fell in line when the time ran out.
Egypt: PMI shows business activity fell further in June. The non-oil PMI eased to 48.8 in June from 49.5 the previous month, signaling a faster decline in business activity in the fourth consecutive month of contraction. The weaker reading was largely due to a steeper decline in output (47.6 versus 49.5) and new orders (47.9 vs 49.1) which led to a drop in purchasing activity to the lowest level in almost a year. This came in line with continued demand weakness and a deterioration in 12-month ahead business confidence, with the latter falling to a historic low, also related to the spike in regional geopolitical tensions in June. The weaker demand and expectations led to a continued decline in employment. On the price front, the increase in input prices eased to the slowest pace in three months, while the pace of output price increases eased from May’s seven month high.
Qatar: Non-energy private sector activity ticks up in June. The non-energy private sector PMI rose to 52 in June, improving from 50.8 in May, but remaining relatively soft compared to the series average of 52.2. Private sector employment remained the main driver in the improvement in activity with employment growth, while remaining unchanged from May, rising at the third fastest pace in the series history and fueling the second sharpest increase in wage inflation. Output returned to growth, but only at a moderate pace, with the wholesale and retail sector leading the rebound. Meanwhile, new orders fell, weighed by a contraction in manufacturing and construction sectors. Business sentiment 12-months ahead remained solidly positive but eased from May and fell below the long-run trend level, with confidence centering around sectors like real estate, construction and industry as well as international investment and tourism. On the price front, output prices declined for the 11th consecutive month, in line with the mostly sub-1% CPI readings in the past year including a -0.1% y/y print in May.
