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Business conditions in the United Arab Emirates and Saudi Arabia improved in July as price pressures edged slightly lower and employment expanded.
Input costs in the Arab world’s two largest economies eased marginally after soaring to an 11-year high in June, according to S&P Global. Its Purchasing Managers’ Index for the UAE was at 55.4, up from 54.8 during the previous month and well above the 50-mark separating growth from contraction. The Saudi PMI stood at 56.3 in July, down from 57. The 50 mark separates expansion from contraction.
Although price pressures are building, the oil-rich Gulf is among regions where inflation has remained relatively muted, thanks in part to limits on domestic fuel costs in some nations. Still, countries including Saudi Arabia and the UAE have had to set aside billions of dollars in inflation relief to support low-income citizens and stockpile key commodities.
- Expansion in the kingdom’s non-oil private sector was partially due to rising sales led by stronger export demand and better market conditions
- Firms still faced an increase in costs, with oil and material prices driving inflation
- Optimism regarding future activity slipped slightly but was still strong overall
UAE PMI:
- Companies increased output, with the pace of expansion being the joint-fastest this year
- Employment levels rose only slightly as firms responded to rising backlogs
- Sentiment fell to a 10-month low but companies were optimistic about the coming year
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