Saudi, Egypt business activity improves but UAE is dealt setback

Published 03 Nov,2020 via Bloomberg Markets - Business conditions improved in Saudi Arabia and Egypt for a second month but deteriorated in the United Arab Emirates amid further job losses and concerns over renewed lockdowns.

Non-oil private sector activity in Egypt rose at the strongest pace in nearly six years last month, according to IHS Markit’s Purchasing Managers’ Index. In Saudi Arabia, operating conditions were slightly better, while the UAE’s PMI fell below the threshold of 50 that separates growth from contraction for the first time since August.

• Egypt’s PMI rose modestly to 51.4, the strongest reading since Dec. 2014 and up from 50.4 in September
• New order growth was the highest in over six years, but employment fell
• In Saudi Arabia, the PMI increased to the highest in eight months, reaching 51 in October from 50.7 in September
• Job losses accelerated at the fastest pace since June
• The UAE’s PMI reading fell to 49.5 from 51 in the previous month
• New business dropped for the first time since May while output growth and job losses continued

Maintaining the rebound across the three biggest Arab economies will be a challenge as tough new restrictions are imposed around the world to contain Covid-19. For Saudi Arabia, the region’s largest economy, employment numbers dropped at the fastest rate since June and there were “fresh concerns” about the pace of recovery from the virus outbreak, according to IHS Markit.

Meanwhile, the outlook among UAE businesses for the next 12 months was at a record low, with fears over the persistence of the pandemic hurting future activity.

“The recovery in demand across the UAE non-oil economy suffered in October,” said David Owen, economist at IHS Markit. “While the decline was mild, it nonetheless showed a stalling of growth momentum after the Covid-19 lockdown.”

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