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Non-oil business activity grew at a slower pace in April due to disruptions from the storm, which impacted business operations and sales, according to S&P Global’s purchasing manager’s index (pdf). The index dipped to 55.3 in April, down from 56.9 in March, remaining well above the 50.0 threshold that separates growth from contraction, although it came in lower than the post-pandemic peak in February.
Business growth came in at its slowest pace in 14 months, as new order volumes slowed and consumer demand eased amid business disruptions caused by the flooding, as well as high workloads, which also led to a significant increase in backlogs.
Purchasing expenses were high: April saw a spike in purchasing and staff costs driven by increased raw material prices and efforts to offset employees’ higher living expenses. Meanwhile, companies slashed prices to boost sales amid stiff competition, resulting in a marginal decrease in average prices.
Companies were cautious about their inventories, with stocks of purchases expanding at its slowest rate since March 2022. Supplier performance also saw minimal improvement, partly due to transportation disruptions caused by the flooding during the month.
Staffing levels only grew modestly: While companies saw a continued increase in employment levels on the back of new projects and strong demand — which maintained a two-year stretch of jobs being created — the pace of employment growth was mild due to reported high costs. “Pressure on operating margins remained a challenge, as price discounting continued despite faster rises in purchasing costs and salary payments,” said S&P Global Market Intelligence Economics Director Tim Moore.
Some respite: Business sentiment remained strong as companies noted “buoyant market conditions and strong sales pipelines, as well as a swift recovery from weather-related business disruptions.”
Dubai’s PMI, meanwhile, reached an eight-month low but still posted growth, with the index slipping to 55.1 in April, down from 58.0 in March. “Companies operating in Dubai recorded a particularly acute loss of sales momentum as adverse weather disruptions hit business and consumer spending,” Moore said.
FROM THE REGION-
Non-oil business activity maintained a steady growth rate in April, thanks to favorable market conditions including sustained levels of high demand, growth in customer base, new investments, and heightened competition, according to the Riyad Bank Saudi Arabia PMI (pdf) out yesterday. The headline purchasing managers’ index remained unchanged m-o-m at 57.0, remaining firmly above the 50 threshold that separates growth from contraction.
