Business activity in the non-oil private sector sees accelerated growth across Saudi Arabia, the UAE and Egypt, HSBC’s August Purchasing Managers Index (PMI) reveals.
The index uses a 50-point mark, where any reading above indicates expansion and anything below suggests contraction. In the UAE, which scored 58.4 points, business activity has been the highest since the series began in August 2009.
According to the PMI, this record growth has been driven by new orders, which accelerated to 66.4 points, the highest in nine months, suggesting that the local market has passed its recovery stage and is now enjoying outright expansion.
As Simon Williams, chief economist for Middle East and North Africa at HSBC, puts it: “Risks may be starting to rise, but, for now, this is a boom in full flow.”
In Saudi Arabia, business confidence has risen sharply, as the PMI suggests that growth has been the fastest since July 2011. Once again driven by new orders, which gained 69.4 points as a result of interest from foreign markets, the overall index rose to 60.7 points in August. As AMEinfo reported last month, the PMI grew to 60.1 points in July, which itself was a 0.9 increase on June, suggesting that business activity has been surging throughout the summer in the kingdom.
Even Egypt, which is still on a rocky road to recovery following three years of socio-political turmoil, has seen encouragement in the non-oil private sector, with the index standing at 51.6 points.
Considering the growth is the highest since December 2013, the data has come as a surprise to many experts. Namely, only last month Egypt’s government – facing an energy crisis – decided to cut fuel subsidies, which sent prices soaring by up to 78 per cent across the country.
Nonetheless, a sharp increase in new orders and outputs suggests that confidence in the private sector has almost instantly returned, at least according to HSBC’s Williams.