Business activity in the private sector not oil of the Arab world’s two largest economies continued to expand in March, on the back of a Covid-19 vaccine.
The IHS Markit Saudi Arabia Purchasing Managers’ Index posted 53.3 in March, down from 53.9 in February, a slightly softer but relatively solid rise in the performance of the private sector economy not for oil. A reading above a neutral 50 level indicates economic expansion and below indicates a contraction.
Non-oil companies in the kingdom continued to have expansions in production and purchasing, and a stabilization in job numbers that helped try to reduce exceptional labor.
Despite the softer activity in March, “we should still see an improvement in business activity in official data for the first quarter of 2021,” said David Owen, an economist at IHS Markit.
The Kingdom’s employment numbers were largely stable in the last survey, pointing to one of the best performance in the labor market since the period preceding the Covid-19 outbreak. Rising output encouraged companies to expand purchases, although slower growth of new order and efforts by some companies to turn shares mean that buying activity increased only modestly.
The IHS Markit UAE PMI jumped in March to 52.6 from 50.6 in February, the sharpest rise in 20 months and the fourth consecutive month of expansion driven by new business inflows and a sharp pick-up in the construction sector.
The main driver was the Output Index, which recorded its highest reading for more than a year and a half, pointing to a sharp rise in non-oil activity, as demand rose again on the back of the fax rollout. t boosted business confidence and spending, Reconstruction efforts were also an important factor for growth, according to the survey. Respondents noted a resumption of old projects and an increase in new work.
“Improving activity in the construction sector acted as a much-needed impetus for the UAE non-oil economy in March, with the PMI gaining ground and posting the highest reading since mid-2019,” Owen said. “Business confidence improved after a full eight months, with fax optimism driving confidence in future activity.”
Published: April 5, 2021 10:15 p.m.