UAE's non-oil private business sector grows to 20-month high

 

The non-oil private business sector in the United Arab Emirates recorded its fastest growth since July 2019 during March in the backdrop of an improvement in construction activity. According to the latest monthly data published by IHS Markit, UAE's Purchasing Managers' Index (PMI) climbed up two points from 50.6 in February to 52.6 in March. As a result, business conditions witnessed a boom in the Arab nation last month.

“The PMI has also now been above the 50.0 no-change mark in each of the latest four months, signalling increased momentum in the economy’s recovery," said David Owen, an economist at survey compiler IHS Markit.

In the report, he underlined that investors' confidence has surged to an eight-month high in the UAE after the country's impressive vaccine rollout boosted business confidence in future activity. The economist stated that an upswing in construction sector activity has facilitated growth in the UAE's non-oil economy during March.

However, the report has also pointed out that the cost of operations in the non-oil sector increased substantially last month, resulting in a "slight drop" in employment across businesses in the sector.

“Despite a greater intake of new orders, anecdotal evidence suggested that firms sought to ease cost pressures through staff reductions,” the PMI report noted.

In this regard, business owners are expecting further easing of COVID-19 pandemic-related restrictions in order to accelerate their production capacity in the country. The resumption of construction work in both old and new projects last month served as a key factor to reinforcing growth in the country. As new work inflow rose, the rate of expansion also soared to an eight-month high, the report revealed.  

On the other hand, Saudi Arabia’s non-oil sector suffered a slowdown in sales and decreasing confidence among firms. As a result, the Kingdom’s PMI decreased from 53.9 in February to 53.3 in March. This means Saudi Arabia's PMI gauge has dropped by 3.8 points in March from its peak in January

At the same time, employment observed stability in the Kingdom as an increase in output encouraged businesses to expand their purchasing capacity in the country. However, companies are cautious about the speed of economic recovery from the repercussions of the COVID-19 pandemic.

Meanwhile, the two biggest economies in the Arab World are working towards recovering from last year's recession with the help of their vaccination efforts and a rise in oil prices.