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Regional PMIs held up well in July

Khatija Haque - Head of Research & Chief Economist
Published Date: 03 August 2022


The UAE’s PMI rose to 55.4 in July from 54.8 in June, indicating an improvement in business conditions in the non-oil sector at the start of the third quarter. Business activity and new work increased at a faster rate than in June, while firms added more workers in response to strong demand. Nevertheless, backlogs of work increased at the fastest rate in more than two years in July, indicating that many firms may be hitting capacity constraints. 

On the inflation front, input costs rose again last month but at a slightly slower rate than in June, with 12% of firms noting higher prices for raw materials, fuel and shipping. Firms appeared to absorb most of these higher charges, with selling prices fractionally lower on average than in June. Those businesses that offered discounts did so to remain competitive or to attract more customers. 

UAE PMI and key survey components

Source: S&P Global, Emirates NBD Research

Saudi Arabia’s PMI declined slightly to 56.3 in July from 57.0 in June, still pointing to a solid expansion in the non-oil private sector last month.  Both business activity and new work increased sharply, but at a slower rate than in June. New export order growth accelerated however, rising at the fastest pace since November 2021 reflecting stronger foreign demand. Employment in the private sector increased modestly and staff costs rose at the fastest rate since February 2018. 

Firms increased their purchases and stocks of inventories more sharply than in June, with the latter most evident in the wholesale & retail sector. Input cost inflation moderated slightly last month but remained high by historical standards, and firms raised their selling prices for 16th consecutive month. Firms remained optimistic about their future output with 21% of panellists expecting their output to rise over the coming year.     

Egypt’s PMI rose to 46.4 in July from 45.2 in June.  High prices continued to weigh on client demand across all four key sectors covered in the survey (manufacturing, construction, wholesale & retail trade and services).  New orders and business activity declined again in July albeit at a slower rate than in June. However, new export orders increased for the first time in six months, reflecting an improvement in external demand, while employment in the private sector stabilized in July after several months of decline.

Inflationary pressures remain high, but have also improved from the June survey. Input costs increased at a slower rate last month, as did the rate of increase in selling prices. Firms reduced their purchases on supply constraints and soft demand, and inventories declined slightly in July. Overall, firms remained optimistic about their outlook, although the majority of panellists (86%) did not expect any change in activity over the next 12 months.