DUBAI / WAM
March data signalled a second consecutive pick-up in the rate of improvement in the health of the UAE’s non-oil private sector. Business conditions improved at the strongest pace in four months, mainly driven by sharper rises in output and new orders.
Notably, total new work increased more quickly in spite of a renewed fall in exports. Both employment and input stocks remained in growth territory, but the respective rates of expansion eased slightly. On the price front, input costs rose only modestly, meaning that companies were able to reduce their
tariffs amid greater competition.
The survey, sponsored by Emirates NBD and produced by Markit, contains original data collected from a monthly survey of business conditions in the UAE non-oil private sector.
Commenting on the Emirates NBD UAE PMITM, Khatija Haque, Head of MENA Research at Emirates NBD, said, “While the improvement in the Emirates NBD UAE PMI in March is encouraging, the average PMI for Q1 2016 signals a further slowdown in the non-oil private sector of the UAE at the start of this year. Nevertheless, the solid growth in output and new orders in the first quarter suggests that domestic demand is holding up well despite the headwinds of a strong USD and low oil prices.”
Adjusted for seasonal factors, the headline Emirates NBD UAE Purchasing Managers’ Index (PMI) – a composite indicator designed to give an accurate overview of operating conditions in the non-oil private sector economy – climbed to a four-month high of 54.5 in March. Up from 53.1 in February, the latest figure indicated that growth had continued to rebound from January’s near-four year low. That said, the improvement in business conditions across the first quarter (53.4) was the weakest on average since Q1 2012.
Employment in the UAE’s non-oil private sector increased further in March, extending the current sequence of job creation to 51 months. The rate of hiring eased since February, however, and was muted in the context of historical data.
Growth of the non-oil private sector as a whole was supported by higher output and new work during March. In particular, output rose at the quickest rate since last September, helped by enhanced marketing efforts and incoming new projects.
New business also increased at a faster pace. However, the expansion was subdued relative to the long-run trend, with data highlighting weakness in international demand. New export orders fell for the first time in six months, albeit only marginally.
The sharp rise in output requirements was reflected by firms’ purchasing during March. Growth of input buying picked up to a four-month high, with panellists commenting on stronger-than-expected sales. Firms were also upbeat towards future demand, leading them to build up their pre-production inventories. That said, the rate of accumulation was only modest overall.
Employment in the UAE’s non-oil private sector increased further in March, extending the current sequence of job creation to 51 months. The rate of hiring eased since February, however, and was muted in the context of historical data. Meanwhile, backlogs of work rose only fractionally, with some companies suggesting that they had become more efficient in production.