Non-oil activity in Arab world’s top two economies improves as new orders rise
Non-oil private sector activity in Saudi Arabia and the UAE, the Arab world’s two biggest economies, grew last month as the number of new orders increased amid Covid-19 inoculation programmes.
The kingdom’s IHS Markit Purchasing Managers’ Index reading stood at 55.2 last month, up from 53.3 in March, indicating a marked improvement in its non-oil economy.
A reading above a neutral 50 level indicates economic expansion and one below points to contraction.
Business activity grew at its sharpest pace in three months in April, driven by a significant rise in new sales. Saudi Arabia’s economy has improved each month since September.
The non-oil economy’s growth came as “business conditions continued to recover from Covid-19”, said David Owen, an economist at IHS Markit.
Employment in Saudi Arabia, the Arab world’s biggest economy and Opec’s top oil exporter, also improved in April as companies expanded recruitment for the first time in five months. The pace of increase was the fastest since November 2019, said Mr Owen.
Demand growth also picked up for the first time this year amid expectations of further easing of Covid-19 measures.
Business activity also received a boost from an increase in export sales that was linked to strengthening demand from Asian clients.
The UAE’s IHS Markit PMI reading rose from 52.6 in March to 52.7 last month, pointing to a solid improvement in the health of the nonoil sector.
The reading was above the neutral threshold for a fifth consecutive month and hits its highest level since July 2019.
The non-oil private sector economy was supported by a solid increase in business volumes and a sharp expansion in output, which companies attributed to the continued recovery from the pandemic.
The largest growth contributor at the start of the second quarter was the increase in new orders, which hit a 20-month high last month.
Companies that took part in the survey said Covid-19 vaccination programmes and improved business sentiment led to better market conditions.
New export order growth also fuelled non-oil economic activity but the upturn was more modest than that of total sales, the survey said.
The latest PMI data suggests that “the UAE non-oil economy remains on the right track” for a recovery from Covid-19, said Mr Owen.
Business sentiment improved for a fifth straight month on hopes that a continued recovery would lead to the further easing of Covid-19 restrictions.
Expectations of Expo 2020led sales growth later in the year also helped to lift business sentiment.
Both Saudi Arabia and the UAE have eased restrictions on businesses as their mass vaccination programmes continue.
More than 1.17 billion Covid-19 doses have been administered in 174 countries, with mass screening and vaccination central to efforts to fight the pandemic.
The UAE has administered more than 10.6 million doses of vaccine, enough to cover about half of its population.
In Saudi Arabia, more than 9.75 million shots have been administered, enough for 14.3 per cent of the kingdom’s population, according to Bloomberg’s vaccine tracker.
More than 44.6 million coronavirus tests have been conducted in the UAE since the pandemic began. Daily case numbers have declined in recent months, after hitting a peak of 3,977 infections on February 3. They have remained below 2,000 over the past six days.
Despite widespread vaccination programmes, there is a surge in infection rates in parts of Europe, the Americas and India, which has resulted in new lockdowns and movement restrictions.
As of yesterday, more than 154 million infections had been registered worldwide, with the number of deaths exceeding 3.2 million, according to Worldometer.
About 10.6 million Covid vaccine doses have been administered in the UAE while Saudi Arabia has given 9.75 million doses