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RIYADH: Business activity across Middle Eastern and North African economies showed mixed trends in August, with the UAE leading growth while Kuwait and Egypt recorded contractions, according to market trackers.

The headline S&P Global Purchasing Managers’ Index, a composite gauge of non-oil private sector performance, is derived from data on new orders, output, employment, supplier delivery times, and inventory levels.

The latest PMI data from S&P Global showed the UAE rising to 53.3 in August from 52.9 in July, rebounding from a 49-month low and remaining comfortably above the neutral 50 mark. The reading signaled an improvement in non-oil private sector conditions.

In Kuwait, the index edged down to 53 from 53.5 in July, its weakest level in six months, though still indicating expansion midway through the third quarter. Egypt, however, slipped further into contraction territory, falling to 49.2 from 49.5 a month earlier. While the decline quickened, it remained less severe than the survey’s long-term average of 48.2.

The figures align with World Bank projections that Gulf Cooperation Council economies will expand by 3.2 percent in 2025 and 4.5 percent in 2026, supported by easing OPEC+ production cuts and stronger non-oil sector activity.

UAE sales growth slows

Sales growth in the UAE’s non-oil private sector weakened for the fourth consecutive month in August, pushing new orders to their lowest level since mid-2021.

“The slowdown added to concerns of fading growth momentum and meant that output was increasingly reliant on backlogs of work,” said David Owen, senior economist at S&P Global Market Intelligence.

He noted that purchasing activity dropped for the first time since mid-2021, highlighting waning demand and softer supply chain conditions. 

“In addition, a renewed drop in the amount of inputs purchased by non-oil businesses, the first since mid-2021, provides a further sign of fading demand in the second half of this year. The reduction came amid a softer improvement in supply chain conditions, which was also said to have disrupted markets,” Owen added.

Although input price inflation eased in August, a sharp increase in wage costs offset the relief. Rising hiring activity and higher salary demands linked to the cost of living drove wage inflation. “Selling prices also climbed at a faster rate during the month, which could raise concerns for consumers if the upward trend persists,” Owen said.

The report showed the UAE’s PMI was supported by stronger output growth, which accelerated to its fastest pace in six months and slightly exceeded the survey’s long-term average. Panelists frequently cited increased sales, project activity, and expansion in local markets as drivers of momentum.

Kuwait’s new orders weaken

In Kuwait, output and new orders grew at their weakest pace since February.

“Inflationary pressures also eased, however, providing welcome respite for firms on the cost front and enabling competitive pricing policies to be maintained,” said Andrew Harker, economics director at S&P Global Market Intelligence.

He added: “Companies were again reluctant to meaningfully increase their workforce numbers, which continued to put pressure on capacity and restrict their ability to finish projects on time. We will hopefully see job creation strengthen in the months ahead, but firms will likely wait and see if the demand picture strengthens before committing to new hires.”

The report noted that while operating conditions improved, it was at the slowest rate since March. Still, Kuwait’s non-oil private sector has posted consistent monthly growth over the past year.

Egypt faces cost pressures

Egypt’s PMI data pointed to a further deterioration in operating conditions, though the pace of contraction was milder than historical averages.

“Employment was also up for the second consecutive month, after a lack of hiring in the first half of the year. However, staffing gains were only mild, while firms remained reluctant to commit to new purchases, particularly as confidence in the year-ahead outlook remains weak,” Owen said.

He added: “Persistent inflationary pressures appear to be a key factor holding back company sales and output projections over recent months. While official CPI inflation has fallen from 2024 levels, it was still at a marked rate of 13.9 percent in July. However, the latest PMI data signaled that business cost pressures were at one of their lowest levels since early-2021.”

Owen emphasized that if easing cost pressures translates into lower prices for consumers, demand could recover.

Still, August marked the sixth consecutive month of falling output and new orders in Egypt’s non-oil economy. The report showed moderate declines across all surveyed sectors, with respondents citing weak demand amid challenging economic conditions and lingering inflation concerns. Although the pace of decline quickened slightly from July, it remained less severe than long-term averages.

CAIRO: Egypt’s net foreign assets rose by $3.54 billion in July to a record $18.5 billion, central bank data showed, as Gulf investments, a currency devaluation 18 months ago and strong remittances from workers abroad help boost deposits, analysts say.

Net foreign assets were $14.96 billion at the end of June. Almost all of the increase was due to higher assets at commercial banks.

Remittances from Egyptians abroad have surged since Egypt sharply devalued its currency in March 2024, jumping to $26.4 billion in the nine months to end-March from $14.5 billion in the year-earlier period, the central bank said in July.

Commercial banks’ foreign assets rose by $3.28 billion in July to $39.49 billion while their liabilities fell by $166.2 million to $31.50 billion, according to the central bank data.

Egypt’s net foreign assets, which include assets held by both the central bank and commercial banks, turned negative in February 2022 and only returned to positive territory in May last year.

They had reached a high of $17.47 billion in July 2021, according to Reuters calculations.