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the private sector business in the UAE and Saudi Arabia.

UAE, Saudi record sharp growth in non-oil business

DUBAI, September 3, 2015

Business activity growth in the UAE’s non-oil private sector accelerated in August to a six-month high, while the same in Saudi Arabia rose to a five-month high during the month, buoyed by the impact of increasing oil production, a survey of businesses showed on Thursday.

UAE

The seasonally adjusted Emirates NBD UAE Purchasing Managers' Index (PMI), which covers manufacturing and services, rose to 57.1 points last month from 55.8 in July. A level above 50 indicates expansion.

"The sharp rise in the UAE PMI in August confirms our view that Ramadan likely contributed to the softer readings in June and July," said Khatija Haque, head of regional research at Emirates NBD. The Muslim holy month of Ramadan, when some business traditionally slows, fell in June and July this year.

Output growth surged to 63.1 points in August from 60.0 in July, while new orders rose to 61.3 from 60.2. Growth in new export orders, however, slowed sharply to 54.4 points.

"Encouragingly, new orders and output growth readings remain high, suggesting strong domestic demand. Slower growth in export orders last month may reflect the impact of currency appreciation relative to other emerging markets," Haque said. The UAE dirham is pegged to the US dollar, which has been strong.

Employment growth slowed slightly but remained positive. Output prices fell for the second month in a row, with the index at 49.2 points, but input price inflation was positive and picked up slightly.

Saudi Arabia

The Emirates NBD Saudi Arabia PMI climbed to 58.7 points last month from 57.7 in July. The 50-point level separates expansion from contraction.

Saudi Arabia has raised its oil output to record highs in the last few months to protect its market share, although global oil prices plunged to six-year lows in August.

Haque said the oil price slide since June did not seem to be hurting non-oil business activity in the country, while higher oil production had apparently boosted activity in related manufacturing sectors that were included in the PMI survey.

 "We expect Saudi Arabia to maintain high levels of oil output regardless of the price, which should continue to underpin activity in the non-oil sectors through the rest of this year," she said.

Output growth in the PMI survey accelerated to 65.8 points in August from 65.1 in July, while new order growth picked up to 64.8 from 63.1. Employment growth rose sharply to 53.3 points.

Output prices fell for the first time in four months, with the index hitting 49.7 points, while input price inflation was positive but slowed. – Reuters




Tags: Saudi Arabia | UAE | Emirates NBD | non-oil | PMI |

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