KHALEEJ TIMES, Saturday, Mar 6, 2021 | Rajab 22, 1442
UAE, Saudi non-oil recovery on track
Emirates, Saudi Arabia:
Non-oil private sector activity in the UAE and Saudi Arabia — the GCC’s
two largest economies — improved at a slower pace in February and employment
rate remained stable, according to the monthly Purchasing Managers’ Index (PMI)
released by IHS Markit on Wednesday.
The UAE’s non-oil private sector expanded for the third consecutive month in
February, though at a marginal pace.
The UAE’s February PMI – an indicator designed to give an accurate overview of
operating conditions in the private sector – fell from 51.2 in January to 50.6
in February to indicate a slower and only marginal improvement in business
conditions.
The UAE’s job market remained largely stable in February as output of the UAE
firms expanded modestly.
“Employment numbers were largely stable in February, as unchanged sales volumes
meant that companies saw little pressure on capacity and were able to lower
backlogs for the sixth month running. Subdued jobs trends were also linked to
expectations for output in the next 12 months which, despite improving to a
five-month high, remained historically weak,” IHS Markit said in its monthly
survey.
However, new restrictions made the near-term outlook more uncertain, although
the rapid rollout of Covid-19 vaccines and projected new business gains from the
Expo 2020 meant that firms were generally optimistic of an improvement in the
economy later in the year.
“The tightening of Covid-19 restrictions in February had a notable impact on the
UAE economy. New orders failed to grow for the first time since last October,
while output growth softened since the start of the year. Reports of weaker
demand were largely led by those sectors that saw the harshest restrictions,
although some firms on the production side were also hard-hit by customs delays
and global shipping problems.,” said David Owen, Economist at IHS Markit.
“The return to stricter lockdown measures meant that many firms’ expectations
for future output growth remained subdued in February, despite the success of
the UAE’s vaccine programme paving the way for a reopening of the economy later
in the year. Only six per cent of businesses gave a positive outlook for the
next 12 months, with overall sentiment remaining one of the weakest seen in the
series history,” added Owen.
Khatija Haque, head of research and chief economist at Emirates NBD Research,
said sentiment improved slightly in February but remains soft relative to the
series history as firms are uncertain about the near term outlook, even with the
UAE’s successful Covid-19 vaccine rollout. Only six per cent of respondents
expected their output to be higher in 12 months’ time.
“We expect the recovery to gain momentum from Q2 as more people are vaccinated,
global travel restrictions are eased and Expo 2020 supports a rebound in tourism
in the final quarter of the year,” she added. In Saudi Arabia, the headline
seasonally adjusted IHS Markit PMI posted at 53.9 in February, to indicate a
solid improvement in the health of the non-oil private sector economy. The index
fell from January’s recent high of 57.1 and was the lowest recorded in four
months.
“The economic recovery in Saudi Arabia’s non-oil private sector lost some
momentum in February… Nevertheless, the sector remained broadly on the right
track, with new business inflows and export sales continuing to rise whilst
firms also built inventories in anticipation of stronger future growth,” added
Owen.
Egyptian non-oil private sector economic conditions weakened for a third month
running in February. However, the pace of contraction softened from January and
was marginal, helped by a record expansion in exports. The IHS Markit Egypt PMI
posted 49.3 in February, up from 48.7 in January, signaling only a slight
deterioration in operating conditions.
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