Saudi, UAE business conditions improve with cooling in inflation, boost in jobs

Saudi, UAE business conditions improve with cooling in inflation, boost in jobs

Business conditions in the United Arab Emirates and Saudi Arabia improved in July as price pressures edged slightly lower and employment expanded.

Input costs in the Arab world’s two largest economies eased marginally after soaring to an 11-year high in June, according to S&P Global. Its Purchasing Managers’ Index for the UAE was at 55.4, up from 54.8 during the previous month and well above the 50-mark separating growth from contraction. The Saudi PMI stood at 56.3 in July, down from 57.

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Although price pressures are building, the Gulf is among regions where inflation has remained relatively muted, thanks in part to limits on domestic fuel costs in some nations. Still, countries including Saudi Arabia and the UAE have had to set aside billions of dollars in inflation relief to support low-income citizens and stockpile key commodities.

“The biggest challenge facing UAE non-oil businesses is inflation,” said David Owen, economist at S&P Global. “While the latest results pointed to a softer upturn in overall input costs, the rate of increase was nevertheless the second-strongest in four-and-a-half years amid global shortages of inputs and greater prices for fuel, materials and shipping.”

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