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Daily Economic Update
01.10.2025Kuwait: Government issues $11.25bn in debt, much more than expected. Following initial steps earlier this week and according to media reports, the government yesterday raised $11.25bn (KD3.5bn) in a three-tranche bond issue across 3-year ($3.25bn), 5-year ($3bn), and 10-year ($5.0bn) maturities. Despite being almost double the $6bn issue size that had been thought to be in consideration, pricing was reportedly tight at 40-50bps over US treasuries, with strong investor demand. This was the first international bond issue since 2017 and follows the issuance of KD1.6bn ($5.2bn) in 1-10 year local currency bonds since the new debt law was approved earlier this year. Following the issue, we would highlight three points. First, the large size of the latest issue should by itself cover the government’s entire fiscal deficit for this year (and then some), which we forecast at around KD2.1bn. Second, it reduces the likelihood of the government tapping international markets again this fiscal year. Third, it gives the government more financial firepower ahead of the FY26/27 budget, the draft of which (based upon recent practice) could be issued in January. This could imply greater scope for an increase in government capital spending next year after successive years of cuts due to financing constraints. Indeed, some earlier (pre-debt law) reports had suggested that fresh government borrowing might be linked exclusively to investment needs.
Saudi Arabia: Citizen unemployment edged up in Q2 from a record low in Q1. The unemployment rate for Saudi nationals rose to 6.8% in Q2, from a record low of 6.3% in Q1, according to the most recent labor force survey. Meanwhile, the labor force participation rate for Saudi nationals eased to more than a three-year low of 49% in Q2 from 51% in the previous quarter, likely pointing to a deceleration in the pace of hiring amid moderating business activity growth (as seen in the PMI readings during Q2). Wages of nationals rose by 8.6% y/y in Q2 and employment of Saudis in the private sector rose to a series high of 50.8% (matching Q3 2024). Non-citizen unemployment also edged up to 1.4% from an all-time low of 0.8% in Q1, contributing to the higher overall unemployment rate of 3.2% in Q2 (2.8% in Q1). The government recently revised the Vision 2030 citizen unemployment target to 5% from the original 7%, which was achieved in Q4 2024. Despite the higher unemployment reading in Q2, the latest labor market statistics are consistent with a generally tight labor market following a multi-year period of solid non-oil GDP and employment growth.
US: Government shutdown begins; publishing of September’s job report on Friday is unlikely. The US government shutdown began this morning, after the latest vote in the Senate failed to garner the 60 needed votes to pass the continuing resolution. With this, the release of the September’s job report by the BLS this Friday seems highly unlikely unless there is a last-minute change in the contingency plan. President Trump had threatened to permanently fire “a lot” of federal workers in the event of a shutdown, a matter that is likely to be contested in courts if followed through in the first place. Whether temporary or permanent, the layoffs will increase the weekly jobless claims over the coming weeks (assuming data on that will be released), distorting the employment picture, which is already flashing some warning signals. The longer the shutdown continues, the more the negative impact on the economy through increased uncertainty and possibly lower consumer spending, among other negative factors. Following the developments, US equity futures pointed to an opening in the red, with gold hitting yet another record high. Meanwhile, the JOLTS report for August continued to point to a low-hiring and low-firing landscape as job openings ticked up slightly to 7.23 million from July’s 7.21 million, with both hiring and layoffs easing from the previous month. The quits rate dropped to 1.9% from 2% earlier, showing moderating confidence in leaving one’s job voluntarily for a better opportunity. Separately, the Conference Board’s consumer confidence index fell to a five-month low of 94.2 in September from August’s 97.8 as consumers became more worried about employment prospects. Fewer consumers viewed that jobs were “plentiful”, with the gauge at a nearly four-year low, while the proportion of respondents saying jobs were “hard to get” remained unchanged, indicating further loosening in job conditions. Finally, US house prices recorded their fifth monthly decline in July, by 0.1% m/m following a drop of 0.2% in June, according to the S&P Case Shiller index (20-city). On an annual basis, prices were still up by 1.8% but decelerated from June’s rise of 2.2%.
UK: GDP growth in Q2 confirmed at 0.3% q/q. UK economic growth in Q2 was confirmed at 0.3% q/q in a revised estimate, slowing from 0.7% in Q1 as effects of activity front-running US tariffs and local stamp duty changes unwound. However, on an annual basis, growth was raised to 1.4% in Q2 from 1.2% estimated earlier, driven by a downward revision to GDP in Q2 2024, and following Q1’s 1.7%. The economy has recently shown some signs of improvement, given relative stabilization in job declines and solid continuous rises in monthly retail sales volume since June. The Bank of England recently upgraded its growth forecast for Q3 to 0.4% q/q from 0.3% earlier. However, uncertainties persist as the government is expected to announce new fiscal rationalization measures on November 26, dampening business and household optimism.