Macro Snapshot — Britain’s private sector activity slows; Japan’s May factory activity grows at slowest rate in 3 months 

Momentum in Britain’s private sector slowed much more than expected this month, adding to recession worries as inflation pressures ratcheted higher, according to a business survey on Tuesday that showed rising pessimism. Reuters/File
Momentum in Britain’s private sector slowed much more than expected this month, adding to recession worries as inflation pressures ratcheted higher, according to a business survey on Tuesday that showed rising pessimism. Reuters/File
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Updated 24 May 2022

Macro Snapshot — Britain’s private sector activity slows; Japan’s May factory activity grows at slowest rate in 3 months 

Macro Snapshot — Britain’s private sector activity slows; Japan’s May factory activity grows at slowest rate in 3 months 

RIYADH: Momentum in Britain’s private sector slowed much more than expected this month, adding to recession worries as inflation pressures ratcheted higher, according to a business survey on Tuesday that showed rising pessimism.

S&P Global’s flash Composite Purchasing Managers’ Index, a monthly gauge of the services and manufacturing industries, slumped to 51.8 in May from 57.6 in April, its lowest level since February last year.

The preliminary reading was worse than all forecasts in a Reuters poll of economists, which had pointed to a drop to 57, and the scale of the fall was bigger than any seen pre-COVID-19.

“The collapse in the composite PMI in May is the clearest sign yet that demand is faltering in response to the intense squeeze on households’ real disposable incomes,” said Samuel Tombs, chief UK economist at Pantheon Macroeconomics.

Until now, most surveys of British business activity had been fairly robust, despite record-low consumer confidence after inflation hit a 40-year high of 9 percent.

US new home sales fall

Sales of new US single-family homes tumbled to a two-year low in April, likely as higher mortgage rates and soaring prices squeezed first-time buyers and those in search of entry-level properties out of the housing market.

New home sales plunged 16.6 percent to a seasonally adjusted annual rate of 591,000 units last month, the lowest level since April 2020, the Commerce Department said on Tuesday. March’s sales pace was revised down to 709,000 units from the previously reported 763,000 units.

Sales have now declined for four straight months. New home sales dropped 5.9 percent in the Northeast and tumbled 15.1 percent in the Midwest. They plummeted 19.8 percent in the densely populated South and decreased 13.8 percent in the Midwest.

Nigeria raises interest rate 

Nigeria’s central bank on Tuesday raised the benchmark interest rate by 150 basis points to 13 percent, its first hike in more than two years, to combat rising inflation, sending markets tumbling.

The move surprised analysts and traders who expected the Monetary Policy Committee to keep the rate on hold.

But Gov. Godwin Emefiele told a news briefing that the rate hike was necessary to tame inflation, which quickened to 16.82 percent in April, its highest in eight months, amid a fragile economic recovery.

Indonesia holds rates

Indonesia’s central bank announced on Tuesday more aggressive hikes in the reserve requirement ratio for banks, expecting inflation to rise slightly above its target band this year, but kept interest rates unchanged at a record low.

Bank Indonesia announced a quicker pace in RRR hikes, ordering banks to park 7.5 percent of their reserves starting July and 9 percent from September. This compared with BI’s previously announced policy path, in which BI had set three staggered RRR hikes this year from 3.5 percent to 6.5 percent in September.

BI left the benchmark 7-day reverse repurchase rate at a record low of 3.50 percent, as expected by 25 of 27 economists polled by Reuters. Its two other main rates were also unchanged. 

Poland budget surplus

Poland had a budget surplus of 9.2 billion zlotys ($2.14 billion) at the end April, state-run news agency PAP quoted Finance Minister Magdalena Rzeczkowska as saying on Tuesday.

Poland had a deficit of 0.3 billion zlotys at the end of March.

Separately, a government spokesman said that the deficit at the end of 2021 was 26.4 billion zlotys, 65.1 percent of what had been planned for in the budget.

Philippines narrows growth target 

The Philippines has revised its 2022 gross domestic product growth target to 7 percent-8 percent from the previous range of 7 percent-9 percent to take into account external risks, the government said on Tuesday.

It also slightly lowered the budget deficit target to 7.6 percent of GDP from 7.7 percent, among revisions that it said took into account the impact of Russia-Ukraine conflict, China’s slowdown, and monetary policy normalization in the US.

The government, however, kept the GDP growth target at the 6 percent-7 percent range for 2023 and 2024, as it expects the domestic economy to sustain its strong recovery in the medium term.

GDP would grow at the same pace in 2025, the economic managers on the Development Budget Coordination Committee said.

German inflation to reach 7%

Germany’s 2022 inflation rate will more than double from last year’s 3.1 percent as already high energy and food prices are pushed up by the war in Ukraine, the country’s Chambers of Industry and Commerce said on Tuesday.

DIHK said it now expects the inflation rate to hit 7 percent, after initially forecasting a rise of 3.5 percent in its February forecast.

Germany’s Economy Ministry said in April it saw an inflation rate of 6.1 percent in 2022 and 2.8 percent next year, citing the effects of energy prices in Europe’s biggest economy.

French business activity 

French business activity slowed slightly in May compared to the previous month, a preliminary survey showed on Tuesday, as inflationary pressures took the shine off fewer COVID-19 restrictions.

S&P Global said its flash May Purchasing Managers’ Index for France’s services sector was 58.4 points — down from a final number of 58.9 in April. Economists polled by Reuters had forecast 58.6 for the May flash reading.

Japan’s factory activity grows 

Japan’s manufacturing activity expanded at the slowest pace in three months in May, as supply bottlenecks due to parts shortages and China’s COVID-19 lockdowns caused output and new orders growth to slow.

Activity in the services sector improved for the second consecutive month on stronger domestic demand due to the fading impact of the pandemic, though service-sector firms faced a drag from the sharpest rise in input prices on record.

 

(With input from Reuters) 


Riyadh no longer one of the 100 most expensive cities for expats: Mercer

Riyadh no longer one of the 100 most expensive cities for expats: Mercer
Updated 14 sec ago

Riyadh no longer one of the 100 most expensive cities for expats: Mercer

Riyadh no longer one of the 100 most expensive cities for expats: Mercer

RIYADH: Saudi Arabia’s capital, Riyadh, has dropped 72 places in a ranking of the world’s most expensive cities for expats as it tumbled out of the top 100, according to a report issued by Mercer.

Riyadh was positioned at 103 in Mercer's Cost of Living Index 2022, falling from 29 in the previous year’s list. 

Commenting on Riyadh’s fall, Khaled Al-Mobayed, CEO of Menassat Reality Co., a Riyadh-based real estate developer, said: “The results came in contrary to the expectations, due to the pandemic’s ongoing consequences and the rising cost of logistics and supply chain.”

“Being out of the 100 top expensive cities is a good sign despite the challenges that the economy has gone through,” he added.

UAE's Dubai took over Lebanon's capital, Beirut, as the most expensive city among Arab countries in the region, ranking 31.

Despite being placed third in 2021, Beirut was not even on this year’s list of 227 cities due to the country’s economic turmoil.

The city’s fall reflects the severe drop in value of the Lebanese pound, according to Lebanese economic analyst Bassel Al-Khatib, who pointed out the minimum wage is now worth $20, while it was $450 before the economic crisis gripping the country. 

“Lebanon is extremely expensive to those who get paid in Lebanese pounds yet very cheap for those who get pain in US dollars,” he told Arab News, adding: “Lebanon was expensive for both citizens and foreigners, and with the currency dropping 95 percent and the dollar reaching record levels, the situation changed.”

“Everything has become expensive but not for foreigners who have dollars. All services by the government such as water, electricity fees, or internet are still the same but food prices skyrocketed,” he added.

Abu Dhabi was the second highest Arab city from the region, ranked at 61, while Jeddah came in at 111 this year compared to 94 in 2021.

Jordan's capital Amman ranked 115, followed by Bahrain's Manama at 117, Oman's Muscat at 119 and Kuwait city at 131.

Egypt's capital, Cairo, was placed at 154 while Rabat, Algiers and Tunis came as the least expensive in the region, ranking 162, 218 and 220 respectively.

Hong Kong topped the list as the most expensive city in the world in 2022, moving from second rank last year and taking the top spot from Turkmenistan’s capital, Ashgabat.

Switzerland’s Zurikh and Geneva followed as second and third most expensive cities, replacing Hong Kong and Beirut respectively.

Turkey’s capital, Ankara, came in as the least expensive city, ranking 227, taking the spot from Kyrgyzstan’s capital Bishkek.


France eyes ‘good investment opportunities’ in Saudi Arabia: Official

France eyes ‘good investment opportunities’ in Saudi Arabia: Official
Updated 01 July 2022

France eyes ‘good investment opportunities’ in Saudi Arabia: Official

France eyes ‘good investment opportunities’ in Saudi Arabia: Official

RIYADH: France is intensifying efforts to take advantage of Saudi investment opportunities in all sectors, mostly energy, technology, water and other industrial services, the country's Ambassador in Saudi Arabia said.

Saudi Arabia is an attractive region and a suitable environment for investments in all its vital sectors, Ludovic Pouille told a press conference.

The French government and the private sector are working to expand the number of companies operating in the Kingdom, which currently stands at about 135, Aleqtisadiah reported citing Pouille.

The aim is to gain large investment spaces, and to benefit from the reforms and economic developments undertaken by Saudi Arabia, which constitute a good opportunity for French companies, he said. 

The French ambassador said France will take the model of agreements between the Al-Ula Authority and his country’s institutions in the fields of infrastructure and culture, as a starting point for expanding the map of investments in the future.


New Saudi smart city AlNama to be zero-carbon

New Saudi smart city AlNama to be zero-carbon
Updated 01 July 2022

New Saudi smart city AlNama to be zero-carbon

New Saudi smart city AlNama to be zero-carbon

RIYADH: Saudi Arabia’s new AlNama smart city will be a zero-carbon community, according to the company charged with designing the development.

The hospitality hub, located on a 10 sq. km area in Riyadh, will create 10,000 jobs in various sectors, including green-tech industries to create a ‘green circular economy’, Construction Week reported. 

The project is planned to provide 11,000 residential units and an eventual population of 44,000 people.

ALNAMA will be designed by Dubai's URB, and the firm’s CEO Baharash Bagherian said: “AlNama aims to be the next generation of self-sufficient city, producing all the city’s renewable energy needs, as well as the resident’s caloric food intake on site.

“Biosaline agriculture, productive gardens, wadis, and carbon-rich habitats are key features of the development’s innovative and resilient landscape design.

“The city was planned through the design of its landscape, rather than its buildings. This creates an urbanism that is more socially inclusive, more economically valuable, and more sensitive to the environment.”

AlNama will consist of eco-friendly glamping lodges, eco resorts and a nature conservation center to promote ecotourism, while an autism village, wellness center and clinics within the medical hub will help promote medical tourism.

The green-tech hub will provide an innovative ecosystem for urban-tech companies related to food, energy, water, waste, mobility, and building materials


Volatile rouble slumps to 10-day low; Gazprom shares extend losses

Volatile rouble slumps to 10-day low; Gazprom shares extend losses
Updated 01 July 2022

Volatile rouble slumps to 10-day low; Gazprom shares extend losses

Volatile rouble slumps to 10-day low; Gazprom shares extend losses

MOSCOW: The Russian rouble plunged more than 6 percent against the dollar on Friday to its weakest level in 10 days, while shares in Gazprom extended losses after the gas giant canceled dividend payments, pressuring Russian stock indexes, according to Reuters.

As of 1019 GMT, the rouble was 5.9 percent weaker against the dollar at 54.50, earlier hitting its weakest point since June 21 at 54.9250. The currency scaled its highest level in more than seven years on Wednesday.

The unit lost 5.9 percent to trade at 56.85 versus the euro .

The likelihood of the rouble strengthening past 50 to the dollar has eased, said Dmitry Polevoy, head of investment at Locko Invest, although high commodity prices were supporting the Russian currency.

The rouble has become the world’s best-performing currency this year, boosted by measures taken to shield Russia’s financial system from Western sanctions imposed after Moscow sent troops into Ukraine on Feb. 24.

The measures have included restrictions on Russian households withdrawing foreign currency savings.

The rouble’s strength has raised concerns among officials and export-focused companies because it dents Russia’s income from selling commodities and other goods abroad for dollars and euros.

Expectations that Russian authorities could resort to foreign currency interventions were putting pressure on the rouble, Polevoy said.

Dividend Fallout 

Shares in Russian energy giants Rosneft and Gazprom followed divergent courses as investors responded to the two companies’ opposing dividend decisions.

Gazprom’s shares were down 5.5 percent, extending heavy losses from the previous session after the gas giant decided not to pay dividends on last year’s results for the first time in more than two decades.

Meanwhile, shares in oil major Rosneft, which approved 2021 dividend payments after Thursday’s closing bell, were gaining ground, up 4.5 percent.

“There are few reasons for optimism in the Russian market,” said Otkritie Research in a note.

The commodity sectors of the market will be under pressure and the rouble may lose some ground before the weekend, Otkritie said.

Russian stock indexes were mixed, with the dollar-denominated RTS index shedding 4.3 percent to 1,286.8 points, hitting its lowest mark since mid-June.

The rouble-based MOEX Russian index was 1 percent higher at 2,225.8 points.

 


Saudi Arabia licences 79 factories with $266.5m investments in May: Ministry

Saudi Arabia licences 79 factories with $266.5m investments in May: Ministry
Updated 01 July 2022

Saudi Arabia licences 79 factories with $266.5m investments in May: Ministry

Saudi Arabia licences 79 factories with $266.5m investments in May: Ministry

RIYADH: The Ministry of Industry and Mineral Resources licensed 79 new factories in May, with investments exceeding SR1 billion ($266.5 million), reaching 411 as total number of licenses since the beginning of the year.

The number of industrial facilities across the Kingdom reached 10,638, led by non-metallic minerals with over 2,056 factories, Saudi Press Agency reported.

Rubber and plastics factories followed with 1,346, while food factories reached 1,268.

Making food products accounted for the largest proportion of the total new licenses with 16 licenses, a report by the ministry’s National Industrial Information Center showed.

Small establishments acquired the vast majority of the new industrial licenses during May, with a rate of 92.4 percent, followed by medium enterprises with 6.3 percent. 

Large enterprises consisted of 1.3 percent of the new licenses, while national factories acquired new licenses by type of investment by 77 percent, followed by foreign enterprises with 13 percent, and joint investment enterprises with 10 percent.

The ministry's report showed that 62 industrial facilities began actual production in May, with investments of SR1.3 billion.

As many as 32 new industrial licenses were issued in the Saudi capital Riyadh, while 19 were issued in the Eastern region, and 11 in Makkah, the report said.

The eastern region occupied the largest number of factories that started production with 17 factories, followed by Riyadh with 16, and the Asir region with 10 factories.

Number of jobs created by the industrial sector during May reached 2,516, all of them citizens, while more than 19,000 expatriate workers left the sector during the same month, the ministry said.