The United Arab Emirates and Saudi Arabia saw improved non-oil private sector growth in February as new orders and hiring increased, a monthly index has found.
The Emirates NBD UAE Purchasing Managers Index climbed to 53.1 in February, after slowing in four of the previous five months.
The index had touched a 46-month low in January because of the bleak economic outlook.
However, the overall improvement in business conditions was helped by expansions in output, new orders and employment last month, Emirates NBD said.
Higher new work was partly a result of lower tariffs and employment also rose at the quickest pace in three months, albeit only moderately overall.
Head of MENA Research at Emirates NBD Khatija Haque said: “The improvement in the Emirates NBD UAE PMI last month is encouraging, particularly against a backdrop of low oil prices, global growth concerns and a strong US dollar.
“However, the rate of growth in the non-oil private sector remains much weaker than a year ago, when the headline PMI registered 58.1. We expect the environment over the coming weeks to remain challenging, with several global factors weighing on sentiment and activity.”
Meanwhile the Saudi PMI index also grew to 54.4 in February, up from January’s record low of 53.9.
Rates of expansion in output, new orders and employment all accelerated, leading to sharper rises in purchasing activity and input stocks, Emirates NBD said.
However, growth rates were still subdued relative to their respective long-run averages.
Haque added: “The improvement in non-oil sector expansion in February is encouraging, particularly as external demand appears to have picked up after a particularly weak start to the year.
“Price discounting has also likely contributed to order growth last month. Overall, the data suggests that the non-oil economy in Saudi Arabia is growing despite low oil prices, albeit at a slower rate.”