UAE non-oil business growth hits 30-month high in August

Growth in the United Arab Emirates’ non-oil private sector climbed at the fastest pace since February 2015 due to sharp expansions in new orders and output, as well as a record rise in inventories.

The seasonally adjusted Emirates NBD UAE Purchasing Managers’ Index (PMI), co-sponsored by IHS Markit, climbed to 57.3 in August, compared to 56 in July and 55.8 in June.

New orders saw an increase for the first time in three months, but growth remained marginal. Companies surveyed said that GCC countries were key sources of international demand.

Firms engaged in purchasing activity as a result of an increase in output requirements, contributing to a sharp rise in inventories.

“On the downside, firms continued to face intense input cost pressures, which mainly emanated from higher purchasing costs according to underlying data,” the statement said.

“In contrast, output charges stabilised during August as firms were reportedly unable to pass on higher cost burdens amid intensive competition. This ended a four-month sequence of falling output prices, however.”

The upturn in new business created more jobs across the non-oil private sector, while the overall upturn in the sector outperformed the long-run average.

“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,” said Khatija Haque, head of MENA Research at Emirates NBD.

Overall business sentiment remained positive, even though it dropped to the lowest in three months.

Write to Yasmin Helal at yasmin.h@argaamplus.com