UAE private sector moves past mid-year slowdown

• Fastest output rise since February
• Saudi non-oil economy also improves
• ‘Stronger’ deterioration for Qatar

The non-oil economies of the UAE, Saudi Arabia and Kuwait continued to improve in September despite the ongoing US-Iran war, while the conflict weighed on Qatari businesses, according to PMI reports.

Demand conditions in the UAE’s non-oil private sector improved, with output rising at its fastest monthly pace since February, just before war broke out in the region, S&P Global said.

The headline S&P Global UAE Purchasing Managers’ Index (PMI) was unchanged at 55.3 in September.

A PMI score above 50 indicates growth, while a reading below 50 signals contraction.

“The UAE’s non-oil economy has moved past the mid-year slowdown linked to the Middle East conflict,” said David Owen, principal economist at S&P Global Market Intelligence.

Owen said input costs and selling charges may remain elevated as oil markets stay volatile and shipping routes remain constrained.

Saudi Arabia

Saudi Arabia’s non-oil private sector continued to expand in September, with new orders rising at their fastest pace since February, Riyad Bank said.

The headline PMI rose to 55.3 in September from 53.8 in August, signalling improved operating conditions for a sixth consecutive month.

The September results align with the broader picture of the Saudi economy, said Naif Al-Ghaith, chief economist at Riyad Bank.

Domestic consumption, investment activity, government and Public Investment Fund-related projects, and continued credit availability were the main drivers of growth in non-oil activity.

Kuwait

Business confidence in Kuwait rose to a seven-month high as output continued to grow in September, according to S&P Global.

The headline PMI reached 52.4 in September, remaining above the 50 no-change mark for a third consecutive month.

Kuwaiti companies are confident the recovery in business activity will continue, after another month of growth in September, said Andrew Harker, economics director at S&P Global Market Intelligence.

The PMI’s historical relationship with official data points to solid growth in non-oil GDP in the third quarter, he said.

Qatar

Business conditions in Qatar deteriorated further, with output and new business declining at a faster pace, S&P Global said.

The PMI fell to 47.3 in September from 47.6 in August, signalling a “stronger” deterioration in business conditions in the non-energy private sector and extending the downturn to seven months.

Weaker market conditions, reduced demand, the ongoing regional conflict and operational issues drove the fall in output. Construction recorded the steepest decline.

The 12-month outlook improved as firms expect market conditions to strengthen once the regional conflict is resolved, said Trevor Balchin, economics director at S&P Global Market Intelligence.

Egypt

Egypt recorded a sharp downturn in overall business conditions, which worsened in September, S&P Global said.

The PMI fell to 47.2 in September from a seven-month high of 49.6 in August.

However, non-oil private sector businesses continued to hire, supported by optimism about future activity and capacity expansions to address growing backlogs.

Egyptian firms remain hopeful about the future despite economic challenges, several of which respondents again linked to the Middle East conflict, said Owen.

The continuing conflict, together with recent Houthi militant attacks, remains a key risk to the domestic economic outlook, he said.

Further reading:

• UAE businesses shake off war cost squeeze faster than neighbours
• Iran conflict disrupts Gulf construction contracts
• Is it time to call Dubai’s recovery?