Despite growing worries about a global economic slowdown and inflationary pressures, business activity in Saudi Arabia’s and the UAE’s non-oil private sector economies saw a significant improvement in August.
As new business growth reached a ten-month high, Saudi Arabia’s seasonally adjusted S&P Global purchasing managers’ index (PMI) increased to 57.7 in August from 56.3 in July, marking its highest reading since October 2021.
For the 24th consecutive month, the headline index increased above its series average of 56.8, showing an improvement in business conditions in the Arab world’s largest economy. A result above the neutral level of 50 denotes growth, whereas a lower reading indicates contraction.
The report stated that non-oil output continued to grow at a marked rate midway through the third quarter of the year, with the pace of growth re-accelerating from the previous month.
Anecdotal evidence from survey panelists suggested that output had mainly increased due to rising new business inflows, which were supported by improving demand conditions.
Midway through the year’s third quarter, improvements were seen in the kingdom’s output, new orders, stockpiles of purchases, and employment.
According to the poll, the wholesale and retail businesses saw the fastest increase in new jobs, with manufacturing, construction, and services also experiencing growth. Companies increased their input purchases in August due to the ongoing improvement in non-oil economic activity, with the growth rate jumping to its sharpest in seven years.
Saudi Arabia’s economy expanded by 11.8% in the second quarter of 2022, with the country’s oil-related economic activity growing by 23.1% annually. The IMF stated in its World Economic Outlook report in July that the kingdom’s economy is anticipated to increase by 7.6% this year, following growth of 3.2% in 2021. In 2022, non-oil growth will reach 4.2% before dropping back to its medium-term potential of 4%.
The UAE PMI Index posted a reading of 56.7 in August, up from 55.4 in July, marking the quickest rise in business activity since June 2019. The sales growth rate was the second fastest in more than three years.
According to the UAE Central Bank, inflation stayed at 3.3% in the first quarter and will typically reach 2.7% in 2022.
The number of people employed rose for the fourth consecutive month, reaching its highest level in a year, as firms added more staff to clear backlogs amid the ongoing economic recovery.
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