Sign in
Non-oil business activity in the UAE regained momentum in August after slipping to a near three-year low the month before, according to S&P Global’s purchasing managers’ index (pdf). The index inched up to 54.2 last month, from 53.7 in July, signaling “solid improvement in the health of the non-oil private sector,” although it came in as the second-softest uptick in over a year and a half.
Business activity was on the up as non-oil firms logged a surge in new orders midway through 3Q. Foreign clients were the big source of new business, with export orders seeing their sharpest increase since October 2023, pushing overall new business growth to a five-month peak. Growth was also supported by improved domestic conditions, which boosted business and consumer spending alongside ongoing project work.
We still have a long way to go: Despite the rebound, business growth was among the weakest it has been in the past three years.
Challenges persisted: While companies kicked up their output to meet the uptick in demand, the impact of this year’s flood and supply chain issues strained operations and slowed down firms’ ability to process new orders in August. Work backlogs hit record levels, “although the rate of accumulation was the softest since January,” the report says.
Supply chains showed some signs of recovery, with vendor delivery times improving as suppliers were “better able to reset their schedules”; stockpiling of inputs resumed modestly. The hiring rate was the softest in seven months — some cut staff to cope with rising costs, but others added to their teams amid rising demand.
Input prices continued to climb: August saw another spike in raw materials, transport, IT equipment, and maintenance costs, while wage costs rose at the fastest pace since May. Still, businesses benefited from cooling purchase price inflation. Businesses raised prices for the fourth month running, though at a slower rate.
Looking ahead: “Projections for business activity strengthened in August … with firms largely positive that domestic economic conditions will improve,” S&P Global said, adding that “companies also suggested that strong sales pipelines would shore up output over the coming months.”
MEANWHILE- Operating conditions in Dubai’s non-oil sector improved at a faster pace, driven by a quicker increase in new business inflows and as stockpiling picked up after the first drop-off in two years. Still, business growth sat at its lowest level since September 2021.
Dubai also saw input costs rise — but at a slower pace — with average selling charges increasing for the fourth month in a row, marking the sharpest rise since April 2021.
Egypt is back in expansion territory
Egypt’s business community snapped its losing streak. Non-oil private sector activity there expanded in August for the first time in over three years, S&P Egypt PMI shows. The report pointed to more stable demand conditions thanks to “market recovery amid improved macro-economic factors and rising export business” as an important reason behind activity finally increasing.
It’s been a long time coming: The index rose to 50.4 in August, up from 49.7 in July. The country’s non-oil private sector has been in contraction since November 2020, but has been flirting with the 50.0 mark that separates growth from contraction since May thanks to cooling inflation and growing confidence.
Saudi Arabia business activity picked up, breaking five-month trend
Saudi Arabia’s non-oil private sector activity grew at a faster pace in August, with the headline PMI figure recording a slight increase to 54.8 in August, up from 54.4 in July, reversing a five-month downward trend, Riyad Bank Saudi Arabia’s Purchasing Managers’ Index shows. Despite the month-on-month growth, the index is below the 56.9 long-run average.
