UAE and Saudi non-oil exports increase

Saudi and UAE exports picked up last month, as robust regional demand spurred on the non-oil sector, according to data from the HSBC Purchasing Managers Index, a monthly economic survey.

Orders for Saudi exports increased for about a third of the country’s non-oil companies, while a quarter of the UAE’s non-oil businesses experienced higher demand for exports. Total orders and backlogs grew in both countries, the data showed.

Both economies showed signs of significant non-oil sector growth in March, with Saudi Arabia’s PMI score at 60.1, and the UAE’s at 56.3. A score above 50 indicates a net expansion in economic activity over the previous month.

Despite showing continued growth, the UAE’s PMI score was at its lowest level for 17 months.

“Rates of expansion eased for the second month running and were below those seen through much of last year,” said Philip Leake, economist at data provider Markit. “As a result, workforce numbers rose at the slowest pace in three years.”

The IMF forecasts that the UAE will grow at 3.5 per cent this year – 1 per cent slower than the IMF’s December forecast of 4.5 per cent growth.

Costs for companies fell overall, as falling inflation and a strengthening dirham led to lower purchasing prices for managers.

As the dollar has risen in value, the purchasing power of the dirham has risen, pushing down the price of foreign goods for consumers in the UAE.

The dollar has risen by around 20 per cent against a basket of major world currencies over the past 12 months, according to data from Bloomberg.

Sudden falls in input prices were recorded in March, with more managers reporting declining input prices than rising prices for the first time in five years. This was also only the second time that input prices have dropped on average since the data series began.

Managers reported only a marginal increase in salaries in March, after 37 consecutive months of wage increases.

Cost decreases were passed on to consumers, with managers citing increased competition between firms as a key factor in their pricing decisions.

In Saudi Arabia, 40 per cent of managers recorded increases in output compared to the previous month. New orders, work backlogs and employment all rose.

Fast growth was coupled with increasing inflation in the kingdom, with large numbers of managers reporting higher staffing and materials costs. The impact on final costs was limited, however, with only 2 per cent of firms reporting that they had increased prices against the previous month.