UAE’s July private sector growth fastest in 10 months
Business growth in UAE’s non-oil private sector hit a ten-month high in July on the back of strong output and new work in the country, a survey released on August 3 reveals.
The seasonally adjusted Emirates NBD UAE Purchasing Managers’ Index rose to 55.3 from 53.4 recorded in the previous month. The 50-point mark separates growth from contraction.
The rate of job creation was the fastest in over a year while in June it was flat and was among the weakest recorded by the survey, sponsored by Emirates NBD and produced by IHS Markit. The pace of hiring picked up to a 14-month high in July which had been near-stagnant over the second quarter.
“July’s survey suggests that the UAE’s non-oil private sector economy started off the second half of 2016 on a strong footing. It is encouraging that despite relatively weak exports, economic momentum is being supported by stronger domestic demand conditions,” says Jean-Paul Pigat, Senior Economist at Emirates NBD.
The survey noted that higher output was a key contributor to growth of the non-oil private sector as a whole. The rate of expansion was the most marked in nearly a year, supported in turn by a sharp rise in new work. Successful marketing strategies underpinned the improvement in demand.
Purchasing activity also grew in July at the fastest pace in four months.
International Monetary Fund (IMF) last month said the non-oil economic activity in the UAE had slowed to 3.7 per cent in 2015 driven by a contraction of public investment in the context of fiscal consolidation, and lower contribution from domestic private demand.
The fund says that the economy will moderate further in 2016, before improving over the medium term. It projects that nonhydrocarbon growth to slow to 2.4 per cent this year in 2016 due to fiscal consolidation, the stronger dollar, and tighter monetary and financial conditions.
Nonetheless, over the medium-term, the growth is forecast to increase to above 4 per cent as the dampening effect of fiscal consolidation is offset by improvements in economic sentiment and financial conditions as oil prices rise, a pickup in private investment in the run-up to the Expo 2020, and stronger external demand.