Home Industry Economy UAE non-oil sector grew strongly in December, Saudi maintains solid growth Both the Riyad Bank Saudi Arabia PMI and the S&P Global UAE PMI remained way above the 50-mark that separates growth from contraction by Kudakwashe Muzoriwa January 4, 2024 Image credit: Oleksii Liskonih/ Getty Images Business conditions in the UAE remained exceptionally strong at the end of 2023, driven by a sharp upturn in new business intakes drove a marked expansion in output levels, a survey showed Thursday, boosting prospects for continued growth in 2024. “The UAE non-oil economy closed the year with another impressive expansion, confirming the strongest quarterly upturn since Q2 2019 and putting the sector in a favourable position for 2024,” said David Owen, senior economist at S&P Global Market Intelligence. “Not only did businesses enjoy another substantial increase in output, but sentiment data suggested that they expect this growth to continue, with year-ahead expectations among the highest seen since prior to the COVID-19 pandemic.” The seasonally adjusted S&P Global UAE Purchasing Managers’ Index (PMI) ticked up from 57.0 in November to 57.4 well above the 50.0 mark, signalling growth in activity and the second-highest reading in more than four years. A study by S&P Global showed that optimism for output activity over the next 12 months strengthened in December from the previous month. Respondents in the survey cited new sales pipelines and enquiries, as well as improving market conditions, as reasons for confidence. Overall output remained robust with the related subindex at 63.9 in December, unchanged from the previous month, amid a year-end surge in new business and a strong sales pipeline. However, after indicating the fastest accumulation of input stocks for nearly six years in November, the latest data suggested a moderation of inventory growth in the final month of the year. Saudi non-oil sector growth Meanwhile, business conditions in Saudi Arabia continued to improve sharply in December, with new orders rising at the fastest pace in six months. The headline Saudi Arabia PMI stood at 57.5 in December, the same as November’s reading, signalling growth across the non-oil economy. The index has remained above the 50 mark for over three years. The output sub-index with a reading of 61.0 also remained broadly at similar solid levels in December as in the previous month, while new orders surged with the sub-index advancing to 68.3, up from 66.3 in November and the highest reading since June on improving demand. “The positive performance of the non-oil sector throughout 2023 has exceeded the expansion witnessed in the previous year, further demonstrating the effectiveness of policies aimed at reducing dependence on oil revenues,” Naif Al-Ghaith PhD, chief economist at Riyad Bank said, adding that the efforts have helped bolster the country’s non-oil industries while enhancing its competitiveness. Riyad Bank’s survey revealed that increased demand momentum gave firms greater confidence in pricing and supported a further marked increase in purchasing activity. However, employment growth and business activity expectations slipped from November. Though survey respondents expected output activity to continue to expand in 2024, the degree of confidence softened in December from the previous month. Construction firms were more optimistic about their growth prospects than the other three main sectors. Read: Saudi Arabia’s new regional headquarters mandate goes into effect Tags Economy Non-oil sector Riyad Bank Saudi Arabia UAE You might also like UAE’s Julphar divests Zahrat Al Rawdah Pharmacies New Zealand seals trade deal with GCC to boost exports, investment Will they or won’t they? Talk of Saudi cutting oil prices for Asia Saudi PIF signs MoUs with Japanese lender worth up to $51bn