Riyadh, Cairo, Dubai: The Emirates NBD UAE Purchasing Managers’ Index (PMI) showed a loss in growth momentum in January, slipping to 52.7, a 46-month low.
A reading above 50 still indicates expansion.
The decline points to the weakest improvement in business conditions since March 2012.
While the PMI was still above the neutral 50.0 level that separates expansion from contraction, the data points to slower growth in the UAE non-oil private sector last month, in line with the trend seen in Q4 2015, Emirates NBD stated in a research note on Wednesday.
It added that the slowdown in non-oil sector growth over the last few months is in line with the bank’s expectations, “as uncertainty about the economic outlook and low oil prices weigh on consumer and business sentiment, and as the strong US dollar continues to impact demand from emerging markets in particular.”
“However, we expect the non-oil sectors to contribute positively to overall growth in the UAE this year,” the bank stated in its note.
Meanwhile, a measure of growth in Saudi Arabia’s non-oil economy fell to a record low as cheap crude weighs on the world’s largest oil exporter.
The Emirates NBD PMI for Saudi Arabia dropped to 53.9 in January, the lowest in the six-and-a- half year history of the survey, driven by slower expansion in new business.
As the price of crude has dropped from above $100 a barrel to below $30 in January, Saudi officials have cut spending, reduced subsidies and called for a wave of privatisations in unprecedented efforts to wean the kingdom off oil.
“The slowdown in the non-oil sectors is in line with our expectations as the economy adjusts to lower oil prices and fiscal policy is adjusted accordingly,” Khatija Haque, head of Middle East and North Africa research at Emirates NBD, said in the report. Global financial market volatility “and increased concerns about Chinese and global growth are likely to have weighed on sentiment,” she said.
Egypt’s PMI, too, contracted for a fourth month, to 48.0 points in January from 48.2 in December. Business activity in Egypt shrank for the fourth straight month in January, a survey showed on Wednesday, as new export orders tumbled and output declined for the fourth time in as many months.
Egypt has been struggling to revive its economy since a popular uprising in 2011 and subsequent political upheaval that has driven both investors and tourists away, depriving it of the foreign currency it needs to import raw materials.
The PMI, which is seasonally adjusted, is based on data compiled from monthly replies to questionnaires sent to executives in 400 companies in manufacturing, services, construction and other non-oil sectors.
