RIYADH: Growth in the United Arab Emirates' private sector in July marked its slowest improvement in three years, economic observers said.
According to the S&P Global Purchasing Managers Index, the Emirates PMI jumped to 53.7 in July from 54.6 in the previous month due to competitive conditions, rising prices pressure and capacity were heavy on the show.
In July, the index was below its long-term average of 54.4 but remained firmly above the 50 extension mark.
David Owen, chief economist at S&P Global Market Intelligence, said: “The decline in the UAE PMI is a further indication that growth in the non-oil sector is slowing in 2024.”
He added: “Business affordability remains one of the key challenges facing the sector, as demonstrated by the sharp increase in backlogs as companies struggle to address supply and management issues. “
In March, UAE Economy Minister Abdulla bin Touq said the Emirates economy is expected to grow by 5 percent this year, led by strong expansion in the non-oil sector and the increase in foreign direct investment.
The minister also said that the UAE's non-oil economy currently accounts for 73 percent of the country's GDP.
According to a report by S&P Global, inflation increased further in July, with companies experiencing the fastest increase in input costs in exactly two years.
The financial agency announced that higher input costs were passed on again to the consumer segment, as product prices increased during the third month of July.
The PMI survey revealed that the level of business activity increased further in July, as companies commented on the increase in new jobs, ongoing projects, and improved supply conditions.
This growth rate, however, has slowed for three consecutive months and is the lowest recorded in the last three years.
S&P Global said demand in the UAE's non-oil private sector remains positive, with sales picking up. However, due to heavy competition, some companies have seen a reduction in the new bill.
The report also highlighted that the UAE's private sector attracted international demand in July, with exports rising at the second-fastest pace in nine months. month.
With concerns that customers may switch to competitors, the survey report indicated that non-oil companies often do more work than they can handle, S&P Global said.
The survey said that retail prices rose again in July, with a record increase of more than six years for the second month, while the delivery times of retailers showed signs improvement.
“Even though delivery times are improving and purchases are increasing, companies have had to dip into their inventory to try and address some of these issues, which could be a headwind to growth if supply is shrinking,” Owen said.
Survey participants also expressed confidence about the growth of non-oil companies in the UAE over the next 12 months, although their confidence has dropped to the weakest level since in January.
“Overall, the PMI suggests that the non-oil sector is expanding strongly and is likely to strengthen if businesses start to pick up their workloads,” Owen said, adding: “Businesses expect that overall, with confidence in the coming year remaining strong, while recruitment continued to increase staffing capacity.”
In the same report, S&P Global said Dubai's PMI fell to its lowest level in two and a half years in July to 52.9 from 54.3 in the previous month. June.
According to the report, the softer increase was due to lower orders in the non-oil private sector in Dubai, which was strengthened by competitive conditions.
Egypt is moving towards growth territory
In another report, S&P Global announced that Egypt recorded a PMI of 49.7 in July, the second highest in three years, but lower than 49.9 in June.
The U.S. embassy said Egypt's non-oil economy was close to the line between growth and contraction in July, with output and new businesses slowing at a rate of the marginal.
The PMI survey added that employment increased in July while output expectations rebounded slightly.
“Egypt's non-oil economy appears to be on the cusp of expansion, with the July PMI just shy of the 50 mark,” Owen said. “While some companies have indicated a change in the economic situation, especially through the increase in export demand, the market conditions are said to be weak elsewhere.”
According to S&P Global, price pressures for Egyptian non-oil companies remained low in July compared to last year, but showed solid signs of increasing input prices. its fastest pace since March.
“Inflationary pressures on businesses have followed the trend seen in the second quarter, which has slowed down compared to the growth rate in recent years,” said Owen.
“However, a slight increase in input price inflation in July may cause some companies to worry that prices may rise again and pressure business activity,” he added. .
At the beginning of the third quarter, Egypt's non-oil companies reported a small but continuous decline in activity, driven by lower sales and price pressures. Although the decline accelerated slightly in June, it was the second weakest in three years.
The report added that nearly 9 percent of the companies surveyed reported a decline in sales, while 7 percent noted an expansion.
On the positive side, new export orders rose for the third consecutive month in July, driven by improved demand for Egyptian non-oil products from foreign markets.
In July, job creation at Egypt's private oil companies also saw a slight uptick, reversing a partial decline in June, as firms hoped the decline would be short-lived. trade and the situation will improve.
Kuwait's non-oil private sector is maintaining momentum
S&P Global has announced that Kuwait's private oil sector has had a good second half of the year, led by an increase in new orders.
The Kuwait PMI for July stood at 51.5, unchanged from 51.6 in June.
“As has been the case for some time, companies in Kuwait were able to use advertising and competitive pricing to gain new business and expand their products during the month of July,” said Andrew Harker, director of economist at S&P Global Market Intelligence.
He added: “Reductions are common despite rising input costs, including rising labor costs.”
According to the report, new orders continued to increase in July although the rate of growth slowed to a 10-month low.
S&P Global added that new orders from regular customers helped Kuwait's non-oil companies expand business again in July.
Harker said non-oil companies have faced difficulty finding the right talent to meet the growing demand.
“The main challenge for businesses in July was finding skilled workers, and these difficulties meant that work remained unchanged throughout the month, resulting in exceptional business growth,” Harker said. “Companies will hope that it will be easier to increase employment in the coming months so that they can expand production and keep the workload constant.”
The survey said non-oil companies in Kuwait remained confident that production would increase next year, although sentiment fell to its lowest level since February.
