Business conditions in the United Arab Emirates improved at the fastest pace in 20 months, taking a sharp turn for the better with the vaccine rollout and an upswing in construction work.
Non-oil private sector activity grew for a fourth month in March, the longest run of expansion since late 2019, according to IHS Markit. Its UAE Purchasing Managers’ Index rose to 52.6 from 50.6 in February.
By contrast, Saudi Arabia’s recovery lost some momentum, with its non-oil economy suffering from a slowdown in sales and worsening expectations by firms. The kingdom’s PMI fell to 53.3 in March from 53.9 in the previous month.
“Improving construction sector activity acted as a sorely-needed boost to the UAE non-oil economy in March,” said David Owen, economist at IHS Markit. “Business confidence improved to an eight-month high, with vaccine optimism driving confidence in future activity.”
The Arab world’s two biggest economies are on the mend as their inoculation efforts and higher oil prices power a rebound from last year’s recessions. The improvements shown by PMIs last month mirror results from around the world as manufacturing surges from the U.S. to Asia.
A revival of construction in the UAE could be a game-changer for an economy whose bellwether real estate sector has seen years of declines in property prices. IHS Markit said “a key factor to growth” last month were efforts to restart building work as the sector experienced “a sharp pick-up.”
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