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Regional PMIs show slight improvement in January

Khatija Haque - Head of Research & Chief Economist
Daniel Richards - MENA Economist
Published Date: 03 February 2021


The UAE’s PMI was unchanged at 51.2 in January, indicating a modest improvement in business conditions from December. New export orders increased sharply in January, on the back of increased demand from GCC countries. However, overall output and new order growth in January was slightly slower than in December.  There is little inflationary pressure evident in the PMI survey, with purchase costs broadly unchanged from December and selling prices only slightly lower m/m. 

Encouragingly, private sector employment ticked up marginally in January, with the index rising to 50.2, the first reading above 50 since December 2019 as some firms looked to boost hiring.  Overall however, businesses remained cautious about the outlook for the next twelve months. Despite the rollout of Covid-19 vaccines in the UAE, the rise in the number of new coronavirus cases in January increased firms’ concerns about possible tightening of restrictions in the short term, according to IHS Markit. The future output index rose slightly to 51.5 in January from 50.1 in December.

UAE PMI steady in January

Source: IHS Markit, Emirates NBD Research

Saudi Arabia

Saudi Arabia’s PMI rose slightly to 57.1 in January from 57.0 in December.  Output and new work rose sharply last month, with the output index at the highest level since October 2019.  Nevertheless, employment in the private sector declined for the 10th month out of the last 11 as firms indicated they had excess capacity. 

Input cost and selling prices rose only slightly in January, confirming our view that headline inflation in the kingdom will moderate this year following last year’s tax-related acceleration. Firms in Saudi Arabia remain optimistic about the outlook over the next twelve months, with 29% of respondents expecting their output to be higher in a year’s time, according to IHS Markit.

Saudi Arabia PMI up fractionally in January

Source: IHS Markit, Emirates NBD Research


Egypt’s headline PMI survey reading came in at 48.7 in January, below the neutral 50.0 level and implying a contraction in the non-oil private sector. Nevertheless, it is a more modest contraction than seen in December when the survey stood at 48.2. Egypt has seen a second wave of Covid-19 cases over the past several months, which brought to an end the three consecutive expansionary survey results over September to November, but daily case numbers are falling once again, and are now back at mid-December levels. Respondents to the January PMI survey cited disruption to business caused by the fallout from the pandemic impacting their output, and the expectation would be that as this wanes the potential is there for a further improvement in the PMI index.

Indeed, business optimism rose to a six-month high in January, on the back of hopes for the vaccination rollout leading to a normalisation in economic activity both at home and abroad. Almost 40% of businesses surveyed expected their output to grow over the next year, and this might explain the slowest fall in employment in 15 months, as firms start to look to their potential staffing needs in a post-pandemic future.