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UAE PMI at five month high while KSA dips but still strong

Daniel Richards - MENA Economist
Published Date: 05 April 2023



The S&P Global PMI survey for the UAE’s non-oil private sector rose to a five-month high of 55.9 in March, up from 54.3 in February. While growth has slowed from the levels seen in the middle of last year, the first quarter’s PMI results have continued to show an ongoing expansion in the private sector, supporting our forecast for non-oil growth of 3.5% this year. The UAE is not immune from the slowdown in play in much of the rest of the world, but the key sectors have been holding up well to date.

UAE PMI and subcomponents

Source: S&P Global, Emirates NBD Research

Output accelerated only marginally from the February print but was also at a five-month high, with respondents citing a strong tourism sector and increasing project work. New orders saw a more robust pickup in growth as they increased at the fastest pace since October, while new export orders turned positive for the first time since November, albeit only fractionally.

Looking at prices, overall input costs rose for the second month running, though at a slower pace in March as compared with February. The increase in costs was driven by both higher input prices, which was reportedly driven by higher raw materials costs for some respondents, and higher staff costs. The staff costs subcomponent rose to an eight-month high in March, with some companies stating that higher orders were leading them to raise wages. Nevertheless, firms continued to discount in a competitive market, with the output prices component sub-50.0 for the 11th month running.

Business expectations rose for the third month in a row, but remained somewhat low by the series average, with 12% of respondents expecting improved conditions in 12 months’ time, while the bulk expected no change. Firms did ramp up hiring however, with the subcomponent rising to 52.6 - the highest level since 2016 - as companies cited the need for more staff in order to complete work on time.


Saudi Arabia’s Riyad Bank PMI declined in March, falling to 58.7 from 59.8. However, this was down from an eight and a half year high registered in February, and the index continues to indicate that the non-oil private sector is growing strongly in the first quarter of 2023. Output growth was slower than in February but still grew at the second-fastest pace in the past 18 months and nearly a quarter of respondents to the survey recorded an uptick as the market strengthened. The pipeline for future workflow remains positive also, with new orders and new export orders still growing rapidly, even if not at quite the same pace as seen the previous month.

KSA PMI and subcomponents

Source: Riyad Bank, Emirates NBD Research

In this environment, firms continue to hire new staff, with the employment sub-component positive for the 12th consecutive month, albeit down marginally on the previous month. Hiring was cross-sector, with wholesale and retail firms seeing particularly strong gains. The quantity of purchases also remained high.

Prices rose sharply for Saudi Arabian businesses in March, with the overall input prices subcomponent rising at the fastest pace since November. Staff costs were a key driver of this as they rose at the quickest rate since 2016, with inflationary pressures in the kingdom feeding through into wage expectations among employees. Purchase costs rose again in March, but at a slightly softer pace than seen in February. Firms were not always able to pass these higher input prices on to customers, and output prices increased only marginally compared with the previous month, with businesses citing increased competition dissuading them from charging more.


Egypt’s headline S&P Global PMI declined in March, falling to 46.7. This is down from 46.9 in February and marks the 28th consecutive month that the index has been in sub-50.0 territory, indicating a contraction in the non-oil private sector. Output declined at a moderately slower pace than seen in the preceding month, with respondents citing import controls continuing to constrain purchases, and weak demand levels. New orders declined more rapidly suggesting further weakness in activity in the coming months, but there was an improvement in the services sector which reported its first increase in sales since the start of last year. New export orders declined at a slower pace in March, but weak global conditions have prevented any capitalisation on the depreciation of the EGP.

Input prices continued to rise rapidly for Egyptian businesses in March, with 32% of respondents seeing a rise in their input prices. Purchase prices rose more quickly than in February, but not at the pace seen at the start of the year. The exchange rate continues to be a key driver of higher prices for goods, while staff costs are rising also, though at the slowest pace since December. Some firms are passing on their higher prices to customers, although the pace of output price rises was the lowest since October and while some firms raised prices, many others were discounting in an effort to remain competitive in a challenging market.

Business optimism improved in March, but this was from the near-record low registered the previous month, and expectations remain muted overall as Egypt contends with multiple domestic and external economic challenges. We forecast real GDP growth of 3.5% in the current fiscal year to June, down from 6.6% last year.


The Qatar Financial Centre PMI rose to 53.8 in March from 51.9 in February on stronger output and new work growth. Activity growth was strongest in the wholesale & retail and services sectors, with financial services being a key driver. Businesses remain optimistic about the outlook over the next 12 months, although the future output index softened from February’s recent high.

Employment increased slightly last month after several months of contraction and the backlogs of work (particularly in construction and manufacturing) continued to ease. Input cost inflation has also moderated since January, and firms were able to reduce selling prices slightly in March.