Arab News, Mon, May 06, 2024 | Shawwal 27, 1445
Kuwait’s non-oil sector steadies in April, UAE maintains growth
Kuwait, Emirates:
Non-oil activities in Kuwait demonstrated steady growth in April, buoyed by
effective advertising and competitive pricing, supporting the expansion in new
orders, an economy tracker revealed.
According to the latest Kuwait Purchasing
Managers’ Index by S&P Global, the country’s PMI dipped to 51.5 in April from
53.2 in March.
A PMI reading above 50 indicates growth in the
non-oil private sector, while readings below 50 signal contraction.
The report noted that job creation scaled back for
the first time in eight months as companies aimed to minimize costs, while the
rate of purchase price inflation was one of the sharpest on record in April.
According to the survey, this reduction in
workforce numbers, coupled with a shortage of available raw materials, led to a
buildup of backlogs of work in April.
“The slowdown in growth seen in April is not cause
for immediate alarm as Kuwaiti firms were still able to generate solid
expansions in new business and output at the start of the second quarter,” said
Andrew Harker, economics director at S&P Global Market Intelligence.
The report mentioned that output prices increased
only modestly in April, as companies endeavored to limit price hikes to
customers by offering discounts.
Furthermore, input costs also surged sharply in
April, driven by a marked rise in purchase prices.
“Growth continued to be predicated, at least in
part, on competitive pricing. This put pressure on margins given rapidly
increasing input costs, however. In a bid to limit expenses, firms cut back on
employment numbers, thereby restricting the extent to which they were able to
fulfill orders,” said Harker.
He added: “There are clearly risks that this will
prove unsustainable and so companies will be hoping that either cost inflation
moderates or that demand strengthens sufficiently to reduce the need for
discounting in the months ahead.”
UAE maintains strong growth
Meanwhile, in another report released last week,
S&P Global revealed that the UAE’s non-oil private sector maintained robust
output growth in April. The Emirates’ PMI reached 55.3, down from 56.9 in March
but remained firmly above the 50 mark, indicating expansion.
According to the survey, this slowdown was
attributed to floods and rains that hit the country in April.
“April data highlighted strong overall growth
across the UAE non-oil private sector as buoyant domestic economic conditions
helped to support long-term business expansion plans. However, the latest survey
signaled a sharp slowdown in new business gains in the wake of heavy rainfall
and flooding,” said Tim Moore, economics director at S&P Global Market
Intelligence.
He added: “Companies operating in Dubai recorded a
particularly acute loss of sales momentum as adverse weather disruptions hit
business and consumer spending.”
S&P Global revealed that backlogs of work
increased considerably in April, attributed to temporary business disruptions
and heightened pressure on operating capacity.
The report added that non-oil businesses in the
UAE remained optimistic about future output over the next year, although the
level of optimism eased, dropping to its lowest reading since January.
“Non-energy businesses are nonetheless still
highly upbeat about their year ahead growth prospects. Many commented on strong
sales pipelines and swift recovery from the impact of heavy rainfall,” noted
Moore.
According to the survey, higher levels of
employment were recorded in April, driven by new project starts and resilient
demand conditions.