The non-oil private sector of the Arab world’s two biggest economies continued to expand in March although at a slower pace, on the back of the COVID-19 vaccine rollout, according to the latest PMI survey data.
The seasonally adjusted IHS Markit Saudi Arabia Purchasing Managers’ Index fell from 53.9 in February to 53.3 in March, a slightly softer, but relatively solid upturn in the performance of the non-oil private sector economy. A PMI above 50 represents an expansion when compared with the previous month.
The non-oil businesses in Saudi Arabia witnessed continued growth in output and purchasing and stabilization in job numbers that aided efforts to reduce outstanding work.
“Despite the softer activity in March, we should still see an improvement in business activity reflected in official data for the first quarter of 2021,” David Owen, an economist at IHS Markit, said.
Employment numbers in Saudi Arabia were largely stable in March, indicating one of the best job market performances since the period before the COVID-19 outbreak. Rising output helped firms to increase purchasing, although slower new order growth and efforts by some firms to run down stocks meant that buying activity advanced only modestly.
The IHS Markit UAE PMI reached 52.6 in March from 50.6 in February marking the sharpest uptick in 20 months and the fourth consecutive month of expansion fuelled by new business inflows and a rise in the construction sector.
“Improving construction sector activity acted as a sorely-needed boost to the UAE non-oil economy in March, with the PMI gaining ground and posting its highest reading since mid-2019. Business confidence improved to an eight-month high, with vaccine optimism driving confidence in future activity,” Mr. Owen said.
According to the survey, the key driver was the Output Index, which registered its highest reading for over a year-and-a-half and pointed to a sharp uplift in non-oil activity as demand rebounded on the back of the vaccine rollout that boosted business confidence and spending. Efforts to restart construction work were also a key factor to growth.