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UAE ACTIVITY GROWTH SLOWS

Spending boosts Saudi non-oil business growth

DUBAI, March 3, 2015

Growth in Saudi Arabia's non-oil private sector accelerated to a four-month high in February as lavish handouts to citizens by the new king buoyed the economy despite the plunge in oil prices, a survey of businesses showed on Tuesday.

However, business activity growth in the UAE's non-oil private sector slowed to a five-month low in February but remained strong and above the average for 2014.

The seasonally adjusted SABB HSBC Saudi Arabia Purchasing Managers' Index rose to 58.5 points last month from 57.8 in January. It stayed well above the 50-point level separating expansion from contraction.

The government has pledged to use its huge fiscal reserves to offset the impact of cheap oil with heavy state spending, while late in January King Salman marked his accession by announcing additional social and infrastructure spending.

That package, including immediate payment of two months' bonus salary to state employees, was estimated by analysts to comprise extra government spending of about 90 billion riyals ($24 billion) this year. It appeared to boost consumer spending in February.

Output growth jumped to 64.0 points in February from 60.3 in January, although new order growth fell marginally to 65.6. Employment growth accelerated to 54.0 points from 52.8.

Input price inflation slowed to 52.5 points while output price inflation edged up to 50.2.

The HSBC UAE Purchasing Managers' Index, which measures the manufacturing and services sectors, fell to 58.1 points last month from 59.3 in January.

Output growth slowed to 64.3 points from 65.5 points, while new order growth dropped by a much larger margin, to an 18-month low of 63.3 from 67.9. Growth in new export orders hit a four-month low but remained above the average for the series, and respondents reported healthy demand from Egypt and Saudi Arabia.

"The rates of expansion slowed since January. Nonetheless, the outlook for the UAE remains bright, with employment rising at a faster pace and cost pressures easing as a result of lower fuel prices," said Philip Leake, an economist at data provider Markit.

Employment growth accelerated to a four-month high. Input price growth slowed to a three-month low while output prices fell for the first time in five months, with the index dropping to 49.1 points from 50.3. - Reuters




Tags: Saudi | business | Private | non-oil |

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