The non-oil private sector in the United Arab Emirates witnessed an upward growth momentum in April as business confidence reached a 34-month high, according to an Emirates NBD monthly survey, while Saudi experienced the slowest improvement in business conditions in almost nine years of the survey’s history.

In the UAE, Emirates NBD’s Purchasing Managers’ Index (PMI) – a measure of the performance of the non-oil private sector economy – rose to 55.1 in April, from 54.8 in March. Any measure above 50 indicates growth in the non-oil economy, whereas below 50 represents contraction.

There were stronger improvements in output, employment and new order, with backlogs of work rising at the fastest rate in 32 months, the survey said.

“The improvement in business condition in the UAE in April was driven by strong output and new order growth, including a recovery in export orders. The rise in employment and selling prices, although modest, is also encouraging,” said Khatija Haque, head of MENA research at Emirates NBD, in a press release on the survey.

The UAE also witnessed sharper inflationary pressures in April, and many respondents noted rising operating costs as both raw material costs and wages increased.

In Saudi Arabia, headline PMI declined to 51.4 in April from 52.8 in March, as new orders deteriorated for first time in the survey’s history. This was combined with softer output growth, along with slowing job creation. But most respondents expressed confidence in the economy and expectations that the slowdown would be temporary.

“The further softening of the non-oil activity data in April is surprising given the sharply higher oil prices so far this year, as well as the expansionary budget that was announced for 2018.  Firms have cited subdued domestic demand as a reason for the decline in new orders last month, although export orders declined as well,” Haque said.

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(Writing by Nada Al Rifai; Editing by Michael Fahy)
(nada.rofai@thomsonreuters.com)

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