Non-oil sector growth in Saudi Arabia, Egypt and the UAE declined in July, according to indicators released on Monday.
Saudi Arabia
Saudi Arabia’s non-oil sector growth slowed in July from the previous month as new orders rose at the slowest pace in two-and-a-half years, a survey showed on Monday.
The seasonally adjusted Riyadh Bank Purchasing Managers’ Index (PMI) in Saudi Arabia fell to 54.4 points in July from 55 points in June.
This is the lowest reading since January 2022, although it is above the 50-point level that indicates growth in activity.
The new orders sub-index slowed to 55.7 in July from 56.0 in June. That was also the slowest pace of expansion since January 2022.
Production growth also fell to its lowest level in 6 months.
Reuters quoted Naif Al-Ghaith, chief economist at Riyad Bank, as saying, “The high competition in the market has led to downward pressure on prices as companies seek to maintain their market share by offering more attractive prices to consumers.”
Saudi Arabia’s real gross domestic product shrank 0.4% in the second quarter from a year earlier, preliminary government data showed, as a decline in oil activity limited overall growth for several quarters.
Egypt
In Egypt, the S&P Global Purchasing Managers’ Index today showed a slight decline in activity in Egypt’s non-oil private sector in July amid concerns among businesses about a possible rise in inflation.
The S&P Global Index fell to 49.7 points in June from 49.9 points the same month, remaining below the 50-point level separating growth from contraction.
The survey results indicate that the non-oil private sector in Egypt has continued to contract in all months since November 2020.
“Companies reported a slight but sustained contraction in activity levels at the start of the third quarter. The decline in output was mainly due to weaker sales, with some companies also citing upward price pressures,” S&P Global said.
The new orders sub-index contracted again, falling to 49.2 points in July from 50.2 points in June, which was its highest reading since August 2021.
Survey participants pointed to the fragility of domestic demand conditions, which are nevertheless close to recovery.
The production sub-index also fell to 49.2 points from 49.3.
“Egypt’s non-oil economy still appears to be on the cusp of growth, with the July PMI reading not far from 50,” said David Owen, an economist at Standard & Poor’s.
“While some companies indicated a turnaround in economic conditions, particularly through higher demand for exports, other areas saw market conditions described as weak,” he added.
“The slight rise in input cost inflation in July may raise concerns among some firms about the risk of prices rising again and undermining business activity,” he added.
The UAE
The S&P Global Index showed that the UAE’s non-oil private sector grew at its slowest pace in about three years in July as growth in output and new orders slowed.
The seasonally adjusted S&P Global Purchasing Managers’ Index (PMI) for the UAE fell to 53.7 in July from 54.6 in June, its lowest level since September 2021 and below its long-run average, though still above the 50-point mark that separates growth from contraction, indicating expansion.
“The decline in the UAE PMI is another signal that non-oil sector growth is set to soften in 2024,” said David Owen, chief economist at S&P Global Market Intelligence, adding that the main challenge is capacity constraints and a backlog of back orders.
