The Week Ahead

Local

The manufacturing sector showed mixed but predominantly negative performance in March 2025. While February posted a modest 0.7% month-on-month production growth and manufacturing sales stabilized with a slight 0.2% increase, these positive indicators were outweighed by several concerning trends.

Manufacturing production declined by 0.8% year-on-year in March, with a sharp month-on-month drop of 2.2%. The first quarter of 2025 saw production decrease by 2.3% compared to Q4 2024, with seven of ten manufacturing divisions posting declines.

Particularly troubling were the significant contractions in petroleum/chemical products (-3.9%), food and beverages (-2.4%), and motor vehicles/parts (-7.0%).
Sales figures reflected similar weakness, falling 0.2% month-on-month in March and declining 1.1% for Q1 2025 overall. The metal products sector (-3.9%) and motor vehicles/parts (-3.2%) experienced the largest quarterly sales decreases, contributing to the overall manufacturing sector downturn.

International

The latest FOMC meeting resulted in the Fed keeping the federal funds rate steady at 4.25% to 4.5%, reflecting a pause amid economic uncertainty driven largely by erratic trade policies and tariffs. While economic growth remains solid and the labor market resilient, inflation is gradually easing but still above target, with tariffs posing upward price pressures. The Fed emphasized increased risks of stagflation and uncertainty around trade developments, signalling a cautious approach with no immediate rate changes planned. It will continue reducing its asset holdings at a slower pace and closely monitor incoming data before adjusting policy, balancing concerns about inflation, growth, and labour market strength.

A U.S.-UK trade deal has been announced significantly reducing UK tariffs on American goods from 5.1% to 1.8%, while the U.S. maintains a 10% tariff on the first 100,000 British cars imported annually, with higher tariffs beyond that. The agreement removes U.S. tariffs on UK steel and aluminium, lowers tariffs on UK autos, and opens new opportunities for U.S. farmers by easing restrictions on ethanol and beef exports. It also creates a steel and aluminium trading zone, secures supply chains for key industries like pharmaceuticals and aerospace, and simplifies customs processes. UK food standards on hormone-treated U.S. beef remain unchanged. Both countries committed to strong protections for intellectual property, labour, and the environment, aiming to strengthen trade ties through fairness and reciprocity. This deal marks a foundational step toward deeper economic cooperation between the two allies.

The US-China trade talks in Geneva over the weekend resulted in a significant breakthrough with a deal and consensus reached on establishing a new economic dialogue framework, but concrete details on tariff adjustments and enforcement remain pending and are expected to be disclosed shortly.