LONDON – “Al Quds Al Arabi” – Agent: The non-oil private sector in Saudi Arabia grew in September and new orders are at a seven-year high after restrictions were eased, a survey on Tuesday showed. The activities and travel led to support for consumer demand due to the Govt-19 epidemic.
In the UAE, the survey shows that the non-oil private sector continues to expand in the same month, with a strong recovery from the epidemic in the trade and tourism hub of the Middle East, despite a recession in employment.
The index of seasonally adjusted IHS Market Purchasing Managers in Saudi Arabia rose to 58.6 in September from 54.1 in August, well above the 50 mark that separates growth from contraction. The 4.5-point increase in non-oil sector levels since August 2015 reflects strong improvement. Companies have increased their production at a higher rate since May, and new orders have risen, so their sub-index has increased by ten points on a monthly basis.
“After two consecutive months of declines, the recent recovery shows that the economic recovery is strong, and the easing of epidemic controls will launch a new demand,” said David Owen, an economist at IHS Market.
Saudi Arabia, the world’s largest oil exporter, expects economic growth of 2.6% this year and 7.5% in 2022, following the corona crisis and a record decline in oil prices after a 4.1% contraction last year.
However, despite the increase in new orders, job availability was low in September. “Demand pressures and growing confidence in operations will drive more companies to hire employees in the last quarter of this year,” Owen said.
In the UAE, the index of seasonally adjusted IHS Market UAE Purchasing Managers, including manufacturing and services, fell from 53.8 in August to 53.3 in September and was above 50.
Restrictions related to the corona virus last year affected key sectors such as tourism, retail and transportation.
But the non-oil economy has been expanding since December as demand has recovered and travel restrictions have eased. The Gulf state is also expected to be inspired by the Expo 2020 Dubai World Expo, which kicks off on October 1st.
“At the start of Expo 2020, the UAE economy appears to be in good shape,” said Owen, an economist at IHS Market. He added, “The Purchasing Managers’ Index fell to 53.3 in September but the recovery in demand indicates a strong improvement in the conditions of non-oil companies … The easing of global travel practices has helped the growth of new businesses.”
The production levels of the surveyed companies also expanded in September, although growth has slowed since August, which saw the highest output in more than two years. New orders soared in September, indicating a significant increase in sales. Some companies announced increased voting, discounts on prices and deals related to the Expo.
UAE companies were hired for the fourth consecutive month, but the employment rate was down somewhat. After a 6.1% contraction last year, the UAE economy is expected to grow by 2.1% this year and 4.2% by 2022, according to the UAE Central Bank.