{"id":78991,"date":"2024-06-04T00:00:00","date_gmt":"2024-06-04T00:00:00","guid":{"rendered":"https:\/\/enterpriseam.com\/logistics\/2024\/06\/04\/non-oil-business-activity-is-looking-up-in-egypt-saudi-and-kuwait-in-may\/"},"modified":"2024-06-04T00:00:00","modified_gmt":"2024-06-04T00:00:00","slug":"non-oil-business-activity-is-looking-up-in-egypt-saudi-and-kuwait-in-may","status":"publish","type":"post","link":"https:\/\/enterpriseam.com\/logistics\/2024\/06\/04\/non-oil-business-activity-is-looking-up-in-egypt-saudi-and-kuwait-in-may\/","title":{"rendered":"Non-oil business activity is looking up in Egypt, Saudi, and Kuwait in May"},"content":{"rendered":"<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>How Egypt + Saudi + Kuwait\u2019s non-oil private sectors performed in May:<\/strong> Purchasing manager indices (PMI) tracking non-energy sectors in Egypt, Saudi Arabia, and Kuwait last month were broadly positive in May. Egypt\u2019s headline PMI jumped to its highest in nearly three years, while Saudi Arabia\u2019s headline figure dipped during the month but continued to signal strong expansion in the country\u2019s non-oil activity. <\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>REMEMBER-<\/strong> The all-important 50.0 mark is the threshold separating contraction from growth. Anything above 50 denotes expansion, while anything below indicates contraction.<\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>First up, Egypt:<\/strong> Egypt\u2019s headline PMI figure rose to 49.6 in May, up from <a target=\"_blank\" href=\"https:\/\/enterprise.news\/logistics\/en\/news\/story\/94e9fa3e-b30c-4885-90e7-e4d40bb5e66b\/non-oil-private-sector-activity-dips-in-egypt-and-lebanon,-while-egypt-sees-inflation-cooling\" style=\"\" rel=\"noopener\">47.4 in April<\/a> and its highest reading in 33 months, according to <a target=\"_blank\" href=\"https:\/\/ent.news\/2024\/6\/314.pdf\" style=\"\" rel=\"noopener\">S&P Global\u2019s Egypt PMI (pdf)<\/a>. Although the reading remained slightly below the 50.0 expansion mark, the \u201cindex signaled only a marginal decline in operating conditions,\u201d the report notes. Non-oil activity began stabilizing during the month amid continued inflationary cooling, supporting improvements in new orders. <\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>New order volume is on its way to recovery as FX stability takes hold:<\/strong> Inflationary pressures in Egypt continued to ease last month, with purchasing managers polled in the survey indicating that wider availability of FX \u2014 in addition to a lower FX rate \u2014 helped to reduce input costs, particularly for imported goods. \u201cNotably, the rate of purchase price inflation slid to its lowest in four years, with the manufacturing and construction sectors even recording outright decreases in costs,\u201d the report notes. <\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>The easing of input cost inflation meant that output and new orders came closer \u201cto the<\/strong><strong> 50.0 growth threshold,\u201d<\/strong> and further containment of output prices \u201cshould give customers greater confidence to spend,\u201d S&P Global Senior Economist David Owen said. New export orders increased \u201cfor the second time in three months\u201d as foreign demand for Egypt continued to recover, the report said. <\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>It\u2019s been a bit of a patchwork across sectors:<\/strong> While the services and construction sectors saw improved business activity during the month, \u201congoing downturns in industries such as manufacturing and wholesale & retail show that the recovery is still lopsided and may take more time to spread across the rest of the economy,\u201d Owens notes. <\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>Confidence is booming:<\/strong> Business optimism improved in May, with businesses expressing more confidence in improved economic conditions buoying further sales growth and sustained deceleration of inflation. Companies grew staff numbers again in anticipation of order growth.<\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>Kuwait similarly saw improved non-oil business performance during the month<\/strong>, with output growth soaring at its fastest pace since the covid-19 pandemic, according to Kuwait\u2019s <a target=\"_blank\" href=\"https:\/\/ent.news\/2024\/6\/316.pdf\" style=\"\" rel=\"noopener\">S&P Global PMI (pdf)<\/a>. The headline figure rose to 52.4 in May, up from <a target=\"_blank\" href=\"https:\/\/ent.news\/2024\/6\/316.pdf\" style=\"\" rel=\"noopener\">51.5 in April<\/a>, signaling \u201ca steep expansion of new orders,\u201d and marking the sixteenth consecutive month in which the non-oil private sector was in expansion territory. <\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>Input costs were up, but competitive pricing helped reel in new orders:<\/strong> Input costs saw a \u201csharp rise\u201d in May, with panelists pointing to \u201cspend on advertising and higher prices for computing equipment, raw materials, and spare parts,\u201d the report says. Despite the continued rise, prices increased at their softest pace since the beginning of 2024, while output inflation \u201cremained modest\u201d as companies looked to maintain competitive pricing. Purchasing activity and inventory continued to grow during the month, albeit at a slower pace due to input cost inflation, the report noted. <\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>Employment isn\u2019t growing fast enough to keep up with new orders:<\/strong> Although firms increased staffing levels in May, \u201cthe rate of job creation was only marginal and insufficient to prevent the strongest build-up of outstanding business in the survey\u2019s history,\u201d S&P Global Market Intelligence Economics Director Andrew Harker warned. Companies will need to increase staffing further to help keep up with backlogs and \u201csatisfy customer requirements in a timely manner.\u201d<\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>Business confidence in Kuwait hit its highest level year-to-date<\/strong>, supported by new orders growing at the fastest pace in the series history, \u201cexcluding the rebound in June and July 2020 as covid-19 pandemic restrictions were loosened.\u201d Purchasing managers also reported new export orders growing at a quicker pace in May. <\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>Over in Saudi, business activity remained firmly in expansion territory, despite recording <\/strong><strong>lower expansion rates.<\/strong> Non-oil business activity in the Kingdom continued to grow in May, supported by sustained growth in demand and new orders, according to the <a target=\"_blank\" href=\"https:\/\/ent.news\/2024\/6\/315.pdf\" style=\"\" rel=\"noopener\">Riyad Bank Saudi Arabia PMI (pdf)<\/a>. The headline purchasing managers\u2019 index inched down m-o-m to 56.4 in May, compared to 57.0 <a target=\"_blank\" href=\"https:\/\/enterprise.news\/logistics\/en\/news\/story\/b9f3ce7f-5457-4a24-9523-3d6c9968912e\/ksa%25e2%2580%2599s-non-oil-private-sector-witnessed-steady-growth-in-april-while-uae-experienced-a-dip\" style=\"\" rel=\"noopener\">in April<\/a>.<\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>The Kingdom\u2019s non-oil economy is still growing \u2014 and competition is getting stiffer:<\/strong> Non-oil businesses reported increases in new orders during the month as demand in the local market remained robust, although the rate of increase in sales softened. \u201cSome companies reported a slowing of market conditions and difficulties gaining new customers due to high competition,\u201d the report says. <\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>The breakdown:<\/strong> The output sub-index fell again to 60.1 last month, down from 61.9 in April, with the sub-index for new orders following the same downward trend to settle at 59.5, down from 61.0 the month prior, according to <a target=\"_blank\" href=\"https:\/\/www.reuters.com\/world\/middle-east\/saudi-non-oil-activity-growth-slows-may-pmi-shows-2024-06-04\/\" style=\"\" rel=\"noopener\">Reuters<\/a>. Firms continued to shore up their inventories as they \u201csought to prepare for strong sales performances in the future,\u201d Riyad Bank said. <\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>Input costs saw \u201ca solid increase\u201d during May<\/strong>, although non-oil firms reported easing purchasing price inflation compared to the start of the year. \u201cNevertheless, the passing on of higher costs to customers remained only partial, as indicated by a marginal rise in selling prices.\u201d Firms continued to be cautious with their pricing as competition grew stiffer, and offered further price markdowns in a bid to gain new customers and orders. <\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>Expectations for more sales growth led inventories to rise again in May<\/strong>, although \u201cthere was some evidence that firms had overreached in their inventory targets and were readjusting purchases, as the rate of growth in new input buying slowed sharply to a 32-month low.\u201d<\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>Higher employment despite lower optimism:<\/strong> Business confidence fell in May, hitting its lowest since January amid lower expectations of sales growth. However, employment levels grew during the month as firms looked to reduce their order backlogs. <\/p>\n","protected":false},"excerpt":{"rendered":"<p>Egypt\u2019s headline PMI jumped to its highest in 33 months<\/p>\n","protected":false},"author":1,"featured_media":78992,"comment_status":"","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"newspack_ads_suppress_ads":false,"newspack_popups_has_disabled_popups":false,"newspack_sponsor_sponsorship_scope":"","newspack_sponsor_native_byline_display":"inherit","newspack_sponsor_native_category_display":"inherit","newspack_sponsor_underwriter_style":"inherit","newspack_sponsor_underwriter_placement":"inherit","ep_exclude_from_search":false,"_primary_brand":0,"newspack_featured_image_position":"","newspack_post_subtitle":"","newspack_article_summary_title":"Overview:","newspack_article_summary":"","newspack_hide_updated_date":false,"newspack_show_updated_date":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[141],"tags":[49,160,140,31,124,32],"brand":[],"newspack_spnsrs_tax":[],"class_list":["post-78991","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-purchasing","tag-egypt","tag-kuwait","tag-purchasing","tag-saudi-arabia","tag-supply-chains","tag-trade","wpautop","entry"],"acf":{"mongo_id":"cfa005f2-f6a4-4a2c-b9ea-31c6ccf42e0b","order":"6","is_powered_by":false,"story_type":"1","photo_url":"https:\/\/ent.news\/2024\/4\/336.jpg","photo_position":"above","homepage_title":"","full_issue_title":"Non-oil 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