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Dubai / Emirates Business
The headline seasonally adjusted 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 — rose to 59.4 in May from 57.6 in April.
This was the third successive monthly increase in the index, with the latest reading signalling a substantial improvement in the business conditions in the UAE non-oil private sector, and one that was the greatest since October 2014.
A record rise in business activity was recorded in May as the rate of expansion accelerated sharply from the previous month. Stronger market demand, marketing activity and the start of new projects all reportedly contributed to the latest increase. Companies largely expect growth to continue over the coming year, with business optimism only fractionally weaker than the previous month’s record high.
The rate of growth in new business in the non-oil private sector also quickened markedly, and was at a near-record pace. As well as improving underlying demand, companies indicated that price discounting helped them to secure new orders. New export orders rose at the fastest pace in the near ten-year survey history, with new business from Saudi Arabia and Oman mentioned.
The aforementioned price discounting was reflected in an eighth consecutive monthly reduction in output prices. Companies were able to lower charges due to muted cost inflation. Overall input prices rose only marginally in May, and at the slowest pace in nine months.
Higher new orders led companies to increase their purchasing activity, which rose at a survey-record pace. Positive expectations regarding future workloads encouraged stock building midway through the second quarter. Inventories of purchases rose to the greatest extent since March 2018.
Although both new orders and business activity increased at
substantial rates in May, non-oil companies again displayed a reluctance to hire additional staff. Employment was broadly unchanged during the month, with almost all respondents leaving their staffing levels stable.