The expansion in non-oil business activity eased in the UAE and Saudi Arabia in August, a business survey showed on Tuesday, yet both remained in growth territory.
Growth in non-oil business activity in the UAE shrunk in August to the slowest pace in six months, yet business confidence hit its highest since before the COVID-19 pandemic.
The seasonally adjusted S&P Global UAE Purchasing Managers' Index stood at 55 in August from 56 in July, falling to its lowest level since February, although it remained well above the 50 mark.
The output subindex showed continued expansion in activity, but it slowed from 62.8 the previous month to 61.9 in August —the lowest since January.
David Owen, a senior economist at S&P Global Market Intelligence, said momentum has waned in the UAE since the four-year peak hit in June, yet August saw a sustained improvement in operating conditions.
The pace of growth in new orders remained healthy, with the subindex at 57.6, similar to July, boosted in part by improving economic conditions, as well as higher household spending and customer numbers, the survey showed.
The latest PMI survey showed that business confidence was robust with the index at its highest since March 2020, the survey said, with strong economic growth prospects fueling optimism.
The UAE's non-oil trade reached an all-time high of $337.3 billion (AED 1.24 trillion) in the first half of this year, amid the Gulf countries' efforts to steer away from its reliance on oil revenues.
Saudi's non-oil business The expansion in non-oil business activity in Saudi Arabia slowed in August after output growth contracted, a business survey showed Tuesday, as concerns over market competition weighed on confidence.
The seasonally adjusted Riyad Bank Saudi Arabia Purchasing Managers' Index declined for a second consecutive month, down to 56.6 from 57.7 in July, the lowest reading since September 2022. However, it stayed in growth territory.
Overall output growth dropped, with the subindex falling to 59.1 —the lowest reading since January last year— from July's 66.0, while the new business expansion also shrunk.
The subindex for new orders slid almost three points to 60.2 with higher competition and lower export sales putting a toll on new business, the survey said.
"The kingdom's non-oil activities have managed to expand despite the continuous challenges arising from input prices and the high interest rates," said Naif Al-Ghaith, Riyad Bank's chief economist.
The PMI survey also showed that business confidence, while remaining positive overall, fell to its lowest level since June 2020, with some respondents saying that competitive pressure is weighing on sales.
GDP growth The UAE economy is projected to grow by 3.5% this year and 3.9% in 2024, driven by strong demand for the Gulf state’s oil exports and energy investments, according to investment bank UBS. The oil-rich country’s non-oil sector is set to grow by 4.5% this year.
Meanwhile, the International Monetary Fund (IMF) slashed in July Saudi Arabia's growth outlook for the current year to 1.9%, a downward revision of 1.2% over prolonged OPEC+ oil output cuts by the kingdom announced in April and June.
