Business activities in the non-oil private sector of the Arabian Gulf’s two biggest economies further improved in August amid mounting inflationary pressures globally.
S&P’s Purchasing Managers’ Index (PMI) for the UAE rose from 55.4 last month to 56.7 in August – the highest recorded since June 2019.
A reading above the 50-mark represents growth.
“The UAE PMI continued to trend higher in August, reaching a 38-month high of 56.7 to signal a robust improvement in business conditions in the non-oil economy,” David Owen, an economist at S&P Global Market Intelligence, said.
Surveyed businesses said the growth was due to a sharper uplift in new order volumes in August. Sales growth was the second-fastest in over three years, S&P said, as businesses witnessed improved demand and increased price promotions.
The UAE non-oil private sector also saw a notable slump in input costs in the same month, driven by lower fuel prices, which helped ease the burden for businesses.
“The data offers hope for other countries struggling with persistent inflation, although concerns remain that global energy supply constraints will continue to push prices higher,” Owen said.
On balance, firms in the UAE are showing “greater hesitancy about the longevity” of the recorded growth phase. Business confidence for 2022 was down to a 17-month low in August, the economist added.
In Saudi Arabia, the biggest Arab economy, the PMI rose from 56.3 in July to 57.5 in August, the highest level since October last year.
The upturn led to a sharp rise in purchasing, the fastest in seven years, as well as further stock building and job creation, S&P said.
“Total new orders rose at the quickest pace since October last year, driven by improving client demand, higher exports, and a broad recovery in economic conditions since the pandemic,” Owen said.
Some companies in the Kingdom were able to cut output charges to attract higher sales, thanks in part to a “slight softening” of input price pressures.
Fuel costs remained a key challenge for businesses, S&P said, while staff wages increased for the sixth month running.
Saudi employment levels rose for the fifth consecutive month in August, as companies “made more efforts to building staffing capacity.”
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