Kuwait’s non-oil sector steadies in April, UAE maintains growth

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.