PMI climbs to 6-month high in January

Dubai / WAM

January data on the health of the UAE’s non-oil private sector signalled solid improvements, which was underpinned by the latest upturn through expansions in output and new work, with the non-oil sector supported by improved foreign demand.
In response to increased new business, companies raised their payroll numbers for the 9th straight month. On the price front, data highlighted divergent trends in January, as firms continued to cut prices, in spite of a faster
increase in costs.
The survey, sponsored by Emirates NBD and produced by IHS Markit, contained original data collected from a monthly survey of business conditions in the UAE non-oil private sector.
“The January PMI data shows that output and new order growth remains strong, and the improvement in export demand last month is particularly welcome, after a relatively soft 2016,” said Khatija Haque, Head of MENA Research at Emirates NBD, regarding the Emirates NBD UAE PMITM.
Rising from 55.0 in December to 55.3 in January, the headline seasonally adjusted Emirates NBD UAE Purchasing Managers’ Index (PMI), a composite indicator designed to offer an accurate overview of operating conditions in the non-oil private sector economy, posted the highest reading since July 2016. This signalled a notable improvement in the health of the sector, particularly in the context of trends over 2016 (53.9) and the survey as a whole (54.5).
The upward movement in the headline index was supported by a sharper increase in new work during January, with new business rising at the quickest rate in 16 months. Anecdotal evidence highlighted promotional activities, increased client demand and stronger underlying economic conditions as key factors that boosted growth of new business inflows. Growth of new export orders also increased to a 14-month high.
Panellists scaled up output and input buying to cater to existing and expected new orders. In both cases, rates of expansion eased since December, but remained sharp.
On the employment front, a further increase in payroll numbers failed to alleviate pressures on operating capacity. The rate of backlogged accumulation was slight, overall, as the vast majority of monitored firms (91 percent) were recorded unchanged in work-in-hand.
Latest survey data pointed to mounting cost pressures in the UAE’s non-oil private sector. A sharp input price inflation was predominantly driven by a marked increase in purchasing prices, as staff costs rose slightly.