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Activity in the non-oil private sector expanded to its highest level in over four years in December,propelled by a surge in new orders, according to S&P Global’s purchasing manager’s index (pdf). The index climbed to 57.4 in December, up from 57.0 in November, recording the second-best expansion level since mid-2019.
It was a good end to the year: “The UAE non-oil economy closed the year with another impressive expansion, confirming the strongest quarterly upturn since Q2 2019 and putting the sector in a favorable position for 2024,” said David Owen, senior economist at S&P Global Market Intelligence. December’s PMI reading signals “a robust improvement in the health of the non-oil private sector, driven by considerable uplifts in output and new orders,” the report said.
New business orders saw a “sharp upturn,” with the sub-index rising to 63.0 in December, up from 60.5 a month earlier, on the back of strong domestic demand. The jump in new orders was boosted by robust domestic market conditions, despite external market demand slowing down. The sub-index for output posted 63.9 in December for the second consecutive month, bolstered by businesses’ “ability to complete work on time, evidenced by only a slight uptick in backlogs.“
Purchasing activity remained on an upwards trajectory to meet growing demand, although some businesses downsized their stocks to offset the inflationary pressures, causing inventory growth to slow in December to a three-month low. Price pressures also eased “as purchasing costs rose to the least degree in almost a year,” Owen said.
Business confidence remains high: Optimism for the non-oil sector’s growth over the next 12 months remains high, with the outlook being “among the highest seen since prior to the covid-19 pandemic.” Surveyed businesses said that the optimism is “largely based on robust sales pipelines,” spurring an expansion in employment so that the pace of job creation matches the expected upward activity.
FROM THE REGION-
- Saudi PMI maintains growth streak: Saudi Arabia’s PMI (pdf) stood at 57.5 in December, unchanged from November’s reading. The strong performance was driven by increased demand, with new orders surging at a six-month high.
- Egypt PMI contracts at a softer pace: Non-oil business activity in Egypt continued to decline in December amid currency weakness, according to the PMI (pdf). The PMI inched up to 48.5 in December from 48.4 in November, as new orders decreased at the sharpest rate since May.
