UAE’s non-oil private sector expands at the fastest pace since 2019

Activity in the non-oil sector expanded at its fastest pace in five years in February on the back of growth in market demand and client activity, fueled by an improvement in business conditions, according to S&P Global’s purchasing manager’s index (pdf). The PMI gauge climbed to 57.1 in February, up from 56.6 in the previous month, indicating “a sharp upturn in overall operating conditions,” S&P Global said. The index remains firmly above the 50.0 threshold that separates growth from contraction.

February’s reading signals “strong upwards momentum in the non-oil economy at the start of 2024,” said S&P Global Market Intelligence Senior Economist David Owen.

But new orders are slowing:New order growth expanded at its slowest rate in six months, “suggesting output growth could also begin to slow,” Owen said. This was attributed to the increase of competitive pressure.

Red Sea disruptions also fed into transport delays, with vendor performance improving only marginally as volumes of backlogged work rose at its sharpest rate in almost four years. “Overall supply chain performance improved at the weakest rate since last July, but nonetheless still improved, suggesting that the impact on vendors is so far limited,” according to Owen.

Hiring was at itshighest level since last May as firms look to deliver on the increasing new orders and to offset backlog growth, S&P Global said.

Optimism rose to a four-month high, though “concerns of a crowded market remain and appeared to dampen sales growth further,” Owen added.

FROM THE REGION-

• Saudi’s non-oil sector regained momentum: Saudi Arabia’s PMI (pdf) expanded to 57.2 in February, up from 55.4 in the previous month, on the back of a strong services and construction sector and new export orders. The growth marked a recovery from January’s two-year low slump.
• Egypt’s business activity health “deteriorated”: Egypt’s PMI (pdf) fell to 47.1 in February down from 48.1 in January, logging an 11-month low as inflation pressures and Suez Canal disruptions dampened demand and caused supply-side challenges.