Emirates NBD: UAE non-oil private sector growth at 30-month high
The Emirates NBD August UAE PMI survey, produced by IHS Markit, showed that growth in the UAE’s non-oil private sector economy climbed to the fastest pace seen since February 2015, bolstered by sharp expansions in new orders and output.
Orders and jobs
New export orders rose for the first time in three months, with other GCC countries being mentioned as key sources of international demand. Moreover, the ongoing upturn in new business translated into job creation across the non-oil private sector.
Increasing output requirements prompted firms to engage in purchasing activity, which contributed to a record rise in inventories. Meanwhile, firms continued to face upward cost pressures. In contrast, output charges stabilised during August.
Khatija Haque, Head of MENA Research at Emirates NBD, said: “Firms have indicated that new projects and competitive pricing are supporting demand and activity in the non-oil sector. This is in line with our view that investment ahead of Expo 2020 will be the key driver of the UAE’s non-oil growth over the next few years.”
The headline seasonally adjusted Emirates NBD UAE Purchasing Managers’ Index™ (PMI®) climbed to a 30-month high of 57.3 in August from 56.0 in July. Moreover, the overall upturn in the non-oil private sector outperformed the long-run average.
The improvement in business conditions was driven by an increase in new orders. Moreover, the rate of growth was the sharpest in 30 months, mostly due new client wins to new projects, enhanced marketing initiatives and good quality products.
Output grows, as do purchasing costs
New export orders rose for the first time in three months, though the rate of growth was marginal.
Companies engaged in purchasing activity during August, in response to greater output requirements. Consequently, inventories held by firms rose at the most pronounced rate in the survey’s history.
On the downside, firms continued to face intense input cost pressures, which mainly emanated from higher purchasing costs. Firms were reportedly unable to pass on higher cost burdens amid intensive competition. This ended a four-month sequence of falling output prices.
Business sentiment remained positive despite dipping to the lowest in three months.