Business activity in the Arab world’s two largest economies improved at the start of 2021, with the UAE seeing growth in its job market for the first time in over a year.
Non-oil private sector activity in Saudi Arabia soared during January as new work levels increased and operating conditions improved marginally in neighbouring UAE, helped by an expansion in new orders and output.
Purchasing managers’ index (PMI) surveys compiled by IHS Markit last month for the two Gulf nations were above the threshold of 50 that separates growth from contraction.
“The rapid roll-out of Covid-19 vaccines in the UAE should help to restore confidence in markets over the first half of 2021, although firms were still relatively downbeat about future growth in January,” said David Owen, economist at IHS Markit.
“On the upside, employment edged into positive territory for the first time in over a year, showing that firms are gaining more confidence to expand their operating capacity,” Owen said.
Saudi Arabia’s PMI rose to 57.1 in January, up fractionally from 57 in December and to the highest in 15 months, driven by a faster pace of expansion in output.
Employment dropped for the 10th time in 11 months, as firms noted capacity levels exceeded demand.
The report said a lower count of Covid-19 cases benefited the kingdom as businesses were optimistic that vaccinations will boost growth.
The UAE’s PMI was at 51.2 last month, unchanged from December. The uptick in employment, although minimal, ended 13 months of job losses as firms were encouraged to hire new employees.
Firms noted “a solid expansion” in activity, which was attributed to higher sales and a resumption in construction projects.
New business increased, partly because of higher export sales, while business expectations were slightly better and at the third-weakest since IHS began tracking the data.
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