Emirates NBD: UAE, Saudi enjoy robust non-oil private sector growth
These are good times for private sector development in the region, especially in the UAE, KSA and Egypt, according to a survey by Emirates NBD, a prominent banking group in the region
Despite softening slightly in September, growth in the UAE’s non-oil private sector remained sharp and marked the strongest quarter recorded for two years, the report said.
The latest improvement in business conditions was driven by above-average expansions in both output and new orders mostly driven by domestic demand.
Khatija Haque, Head of MENA Research at Emirates NBD, said:
“Although the headline purchasing managers index eased slightly in September, the average reading for Q3 was the highest in two years. The survey suggests that economic growth accelerated last quarter, and that domestic demand remains solid, despite relatively modest jobs growth.”
Key UAE Findings
The headline seasonally adjusted Emirates NBD UAE Purchasing Managers’ Index™ (PMI®) eased from the 30-month high of 57.3 recorded in the preceding survey to 55.1 in September. The average in Q3 2017 was 56.1, the strongest since Q3 2015 (56.3).
Stocks of purchases rose at the second-fastest rate recorded in the survey’s history in September. Some respondents noted that they were stockpiling input goods in anticipation of rising output requirements.
Hopes of an upturn in demand for goods and services produced in the UAE’s non-oil private sector underpinned optimism towards future growth. That said, business confidence remained subdued in the context of historical data.
Emirates NBD didn’t report a positive picture of Egypt except perhaps on positively developing export markets, as AMEinfo had also reported in this story, but is the Saudi PMI market faring as well?
September data signalled strong growth in Saudi Arabia’s non-oil private sector. Sharp expansions in output and new orders were key contributors towards the most recent improvement in operating conditions. At the same time, input price inflation continued to soften in the latest survey. Meanwhile, employment continued to increase, albeit only marginally.
Haque said: “The PMI for Saudi Arabia has been relatively stable in Q3, signalling a solid expansion in non-oil sector growth last quarter. While output and new order growth has remained strong, external demand was softer compared to a year ago, as was employment growth. The announcement of key reforms and a successful $12bn (AED44bn) debt issue in late September should have a positive impact on both sentiment and business activity in the coming weeks.”
Key Saudi Findings
The headline seasonally adjusted Emirates NBD Saudi Arabia Purchasing Managers’ Index™ (PMI®) edged down from 55.8 in August to 55.5 in September. The reading continued to signal a sharp improvement in the health of the sector.
September data signalled sustained growth in output across Saudi Arabia’s non-oil private sector. Though sharp, the rate of expansion remained slower than the historical average, however. Panellists that reported a rise in output commonly noted strong underlying demand.
Employment growth across Saudi Arabia’s non-oil private sector remained slight overall and matched that recorded in August. The increase extended the current sequence of job creation to 42 months.
Vendor performance improved to the greatest extent since January 2010 in September. Delivery times have hastened in every month since August 2011.
Finally, business confidence ticked up in the latest survey. Many firms noted that they anticipate an economic upturn in the next 12 months.