Data shows expansion in April for Arab world's two largest economies
Business confidence in the UAE improved for the fifth consecutive month
Business activity in the non-oil private sector of the Arab world’s two biggest economies continued to grow in April as new orders climbed amid a rollout of Covid-19 inoculation programmes.
The IHS Markit Saudi Arabia Purchasing Managers’ Index rose to 55.2 in April, up from 53.3 in March, indicating a marked improvement in the kingdom’s non-oil economy. A reading above a neutral 50 level indicates economic expansion and below points to contraction.
Business activity rose at the sharpest rate for three months in April as new sales climbed significantly. The kingdom has now recorded growth in each month since September 2020.
The latest survey data points to stronger growth across the non-oil economy as “business conditions continued to recover from Covid-19”, David Owen, an economist at IHS Markit, said.
Employment in Saudi Arabia, the top Arab economy and Opec’s biggest oil exporter, also climbed in April as companies expanded recruitment for the first time in five months, with the “pace of increase [being] the fastest since November 2019”, Mr Owen said.
Demand growth also picked up for the first time this year, amid expectations of an easing of Covid-19 measures. Business activity also received a boost by an increase in export sales that was linked to strengthening demand from Asian clients.
The IHS Markit UAE PMI rose to 52.7 in April from 52.6 in March, pointing to a solid improvement in the health of the non-oil sector. The index was above the 50 neutral threshold for the fifth month running and at its highest level since July 2019.
The non-oil private sector economy was supported by a strong rise in new business volumes and a sharp expansion in output, which companies attributed to a continued economic recovery from the pandemic-driven slowdown.
The largest growth contributor at the beginning of the second quarter was the increase in new orders, which rose to a 20-month high in April.
Surveyed firms said market conditions had generally improved due the roll-out of Covid-19 vaccines and strengthening business confidence. A rise in new export orders also fuelled non-oil economic activity, although the upturn was more modest than that of total sales, the survey said.
The latest PMI data suggests “the UAE non-oil economy remains on the right track to a recovery from Covid-19,” Mr Owen said.
Hopes that restrictions on businesses will further ease with continued recovery from Covid-19 boosted business sentiment in April for the fifth month running. Expectations of an uplift in sales from the Expo 2020 later in the year also contributed in lifting business sentiment.
Both Saudi Arabia and the UAE have eased restrictions on businesses as they continue their mass Covid-19 inoculation programmes.
Globally, more than 1.17 billion doses of Covid-19 vaccines have been administered across 174 countries, as mass screening and vaccination remain keys to fighting the pandemic. The UAE has administered more than 10.6 million doses of vaccine, enough to vaccinate almost half of the country's population. In Saudi Arabia, more than 9.75 million shots have been administered, enough for 14.3 per cent of the country’s population, according to Bloomberg's vaccine tracker.
More than 44.6 million coronavirus tests have been conducted in the UAE since the pandemic began. Daily case numbers have declined in recent months, after hitting a peak of 3,977 infections on February 3. Daily numbers have remained below 2,000 for the past six days.
Despite a global vaccine rollout to control the virus, the world is seeing a surge in infection rates in parts of Europe, the Americas and in India, which has resulted in fresh lockdowns and movement restrictions. Globally, Covid-19 infections have crossed 154 million, with 3.22 million fatalities as of Tuesday, according to Worldometer data.
Updated: May 4, 2021 11:27 AM