Saudi, UAE business conditions improve, though employment falls

Saudi, UAE business conditions improve, though employment falls

Business activity in the Arab world's two largest economies improved at the end of last year, with Saudi Arabia seeing its strongest expansion in 13 months.

After 2020 setbacks caused by the spread of Covid-19 and lower crude prices, non-oil private sector economies in the United Arab Emirates and neighbouring Saudi Arabia still faced job losses as firms adjusted to the challenges of the global pandemic.

Purchasing Managers' Index surveys compiled by IHS Markit in December for the two Gulf nations rose above the threshold of 50 that separates growth from contraction. In Saudi Arabia, the gauge rose to the highest since November 2019, driven by an increase in output and new business.

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“The Saudi Arabian non-oil economy is well on the path to recovery,” said David Owen, economist at IHS Markit. “The PMI is now (just) above its series trend level, suggesting the economy is growing at a relatively normal pace, albeit with a lingering output gap to recover.”

The Saudi PMI expanded for a fourth straight month to 57 versus 54.7 in November, with data showing the fastest upturn in new business in a year.

A renewed fall in