Arab News, Thu, Apr 04, 2024 | Ramadan 25, 1445
Saudi Arabia leads March PMI rankings among GCC nations
Saudi Arabia:
Saudi Arabia’s non-oil private sector saw steady growth in March, with output
accelerating to a six-month high, as reflected by the Kingdom’s Purchasing
Managers’ Index.
The economic index reached 57 in March, showing a
slight decrease from 57.2 in February, according to a report by the Riyad Bank
Saudi Arabia PMI by S&P Global.
Any PMI reading above 50 indicates growth in the
non-oil sector, while readings below that signal contraction.
Saudi Arabia’s PMI in March surpassed that of
other Gulf Cooperation Council countries such as the UAE, Egypt, and Kuwait,
indicating that the Kingdom’s non-oil sector growth is in line with the goals
outlined in Vision 2030.
Strengthening the non-oil sector is crucial for
Saudi Arabia as the Kingdom steadily diversifies its economy away from oil.
The US-based firm reported that operating
conditions in Saudi Arabia’s non-oil private sector exhibited robust improvement
at the end of the first quarter, with companies emphasizing significant
increases in order books and new customers.
Naif Al-Ghaith, chief economist at Riyad Bank,
said: “The PMI for Saudi Arabia showcased a notable upswing as the non-oil
economy exhibited significant expansion in the most recent period. This
expansion was primarily fueled by a surge in demand across various sectors,
indicating a robust economic performance.”
He added: “Business activity experienced a
substantial uptick, marking the most significant growth in six months. The
positive momentum also prompted accelerated purchasing activities and additional
hiring, underscoring a buoyant market outlook.”
According to the report, the rise in output levels
among non-oil private sector firms was driven by robust new orders and strong
demand conditions.
Similarly, new orders placed at non-oil firms rose
sharply in March, with the expansion rate accelerating for the second month in a
row.
The survey also revealed that demand from foreign
customers increased in March.
The report indicated rising optimism among
businesses in the non-oil sector for the coming 12 months, driven by
anticipations of growth in demand.
“The surge in orders and customer acquisition not
only bolstered current operations but also laid the foundation for continued
expansion and potential business growth in the foreseeable future,” noted
Al-Ghaith.
He added: “Moreover, the concurrent easing of cost
pressures, particularly in terms of wages, provided companies with greater
flexibility and resources to invest in their operations and workforce, fostering
a conducive environment for sustained economic progress and development in Saudi
Arabia.”
The report further noted that private sector firms
in the Kingdom witnessed a decrease in cost inflation for the second consecutive
month.
UAE maintains growth
Business conditions in the UAE non-oil private
sector strengthened sharply in March, with optimism reaching its highest point
in six months, as indicated by a survey.
According to the latest S&P Global Purchasing
Managers’ Index, the UAE’s PMI reached 56.9 in March, slightly lower than
February’s 57.1 but well above the 50 mark denoting expansion in activity.
David Owen, a senior economist at S&P Global
Market Intelligence, said: “The overall picture for the UAE non-oil private
sector remained rosy at the end of the first quarter. The latest PMI reading of
56.9 in March signaled a robust upturn in business conditions, with order book
inflows and activity levels still growing sharply.”
The US-based firm revealed that businesses in the
Emirates faced significant pressure on their workloads, with reports of
administrative delays and increased supply constraints due to the Red Sea
shipping crisis.
As a result, the data signaled the joint-fastest
accumulation of backlogs of work in the survey’s 15-year history.
“While the surge in backlogs is concerning as an
indicator of business health, the pent-up demand should support activity growth
for even longer once these issues are resolved,” added Owen.
According to the report, strong demand remained a
key feature of growth in the non-oil economy, as surveyed firms witnessed
another sharp uplift in new order volumes.
Moreover, the rate of expansion picked up from
February’s six-month low, though it remained slightly softer than those recorded
around the turn of the year.
Additionally, optimism toward future business
activity among non-oil firms in the UAE rose to the second-strongest level in
four years.
“While the surge in backlogs is concerning as an
indicator of business health, the pent-up demand should support activity growth
for even longer once these issues are resolved,” the economist added.
Meanwhile, the Central Bank of the UAE revised
down its economic growth projection, citing the decision of the Organization of
the Petroleum Exporting Countries and its allies, known as OPEC+.
CBUAE now expects the country’s economy to expand
by 4.2 percent in 2024, down from an earlier estimate of 5.7 percent.
Kuwait records spike in new orders
Kuwait, on the other hand, saw its fastest rise in
new orders since 2020 in March, driving the PMI to 53.2, up from 52.7 in
February.
According to the report, rates of expansion in
output and new orders quickened, while business confidence improved, although
job growth remained only fractional.
Andrew Harker, economic director at S&P Global
Market Intelligence, stated that non-oil firms in Kuwait are currently
experiencing a strong growth phase, with competitive pricing proving successful
in attracting increasing numbers of customers.
Due to the marginal rise in job growth, backlogs
of work continued to build, with outstanding business accumulating for 14
consecutive months.
“If new orders continue to flow in as they have
been doing, firms will likely need to take on additional staff to prevent delays
in the completion of projects,” said Harker.
Qatar economy
Qatar witnessed a marginal decline in its PMI to
50.6 in March from 51 in February, indicating a sustained improvement in
business conditions in the non-energy private sector economy.
“The PMI remained firmly in stable territory in
March, reflecting further growth in output, new orders and employment in the
Qatari non-energy economy,” said Yousuf Mohamed Al-Jaida, CEO of Qatar Financial
Center Authority.
He added that in the first quarter of 2024, the
headline index has trended in line with the average for the fourth quarter of
2023, indicating sustained economic growth.
According to a press statement, in March, demand
for goods and services in Qatar’s non-energy economy continued to expand, with
local firms also extending their workforces, marking over a year of consecutive
growth.
Egypt sees fall in business activity
Meanwhile, Egypt’s non-oil private sector
continued to deteriorate in March, according to another report by S&P Global.
The PMI reached 47.6, slightly higher than February’s 47.1, but remained below
the expansion mark of 50.
According to the report, non-oil private sector
activities declined sharply in March as weak order books and elevated
inflationary pressures continued to impact business output and confidence.
“Businesses in Egypt’s non-oil private sector
continued to come under pressure from the country’s recent currency crisis in
March,” said Owen.
He added that February’s PMI results had indicated
a considerable downturn in business activity, and “March was little different,
except for a modest reduction in the rate of decline.”
Even though firms expressed positivity about the
next 12 months, there were some concerns that economic headwinds might further
reduce sales.
“PMI survey data on prices suggests this may be
the case, with rates of input cost and output price inflation slowing to
three-month lows,” said Owen.
On the other hand, he added that firms are still
lacking confidence that activity will grow over the year ahead, suggesting that
economic risks may take more time to disappear.