[ad_1]
The UAE’s S&P global headline PMI reading fell to a three-month low of 55.5 in May from 56.6 in the previous month, but the survey remained firmly in expansionary territory with strong output growth, the UAE NBD said.
Growth in new orders slowed slightly from a 17-month high hit in April, but remained elevated. This strong order growth continued to be driven by the domestic economy, as new export orders were again nearly flat, moving only slightly away from the neutral 50.0 level for the fourth consecutive month.
Input costs rose at the fastest pace since February in May, but the pace of price growth remained well below mid-2022 levels, and most respondents said their input prices were unchanged. Both procurement costs and staff costs contributed to the slight rise, with companies noting higher raw material prices and some incentives for staff. Companies hired at a slightly faster pace in May. With modest inflationary pressures on inputs, firms continue to discount as they seek to sustain demand: Output prices fell for a 13th straight month as firms took note of competition.
Amid this positive environment, business optimism in the UAE continued to improve and rose to its highest level since October 2021, with almost a fifth of respondents expecting higher output in 12 months. UAE PMIs have been resilient at the start of the year, but we expect a slowing global economy and rising interest rates to weigh on growth in the second half of the year, with our non-oil growth forecast at 3.5% this year.
Saudi Arabia
Saudi Arabia’s Riyadh Bank Purchasing Managers’ Index fell to a four-month low of 58.5 in May from 59.6 the previous month. However, the survey results were still high compared with the long-term average and only low compared with the eight-and-a-half-year highs in February and April. New orders slowed slightly compared with April, but nearly 40% of businesses still reported growth, with tourism and construction particularly strong.
Meanwhile, new export orders turned positive again after contracting in April, with companies citing new product launches as one of the factors behind the increase. Companies continued to hire to meet this demand, with the employment component slightly higher than in April.
The pace of input price increases accelerated in May, with all four sectors reported in the survey registering price increases. This was driven by procurement costs (i.e. raw materials) and staff costs, which rose at the fastest pace in years as workers faced higher living costs. To compensate for higher input prices, firms raised output prices at the fastest pace in 33 months. Only the construction sector reported charging lower prices.
Business optimism fell to its lowest level in 12 months as businesses noted increased competition. However, it remains high compared to the long-term average, with businesses betting that government reforms and project investment will support demand. We forecast non-oil GDP growth of 4.8% this year.
Egypt
Egypt’s purchasing managers’ index rose to a 15-month high of 47.8 in May from 47.3 in April and an average of 46.5 in the first quarter. While still in contraction territory, there are signs that some of the pressure on private sector companies in Egypt may be stabilizing. – trade arab news agency
[ad_2]
Source link