UAE non-oil private sector growth hits 3-month high in November

UAE’s non-oil private sector companies reported a strong upturn in November and the sharpest pace of expansion since August, driven by growth in output and new business, according to Emirates NBD’s latest UAE Purchasing Managers’ Index (PMI) report.

Firms responded to higher output requirements by increasing buying activity at the fastest pace in the survey’s history, the Dubai-based bank said, adding that many respondents anticipated operating conditions to further improve in the next 12 months.

The seasonally adjusted PMI rose to 57.0 in November, from 55.9 the previous month. A reading of above 50 indicates expansion, while below 50 points to contraction.

“The PMI reading for November confirms our view that the UAE’s non-oil sector will likely see strong growth in the fourth quarter of this year, as both households and business will likely boost purchases before VAT comes into effect at the start of next year," Khatija Haque, head of MENA Research at Emirates NBD, said in the statement. 

"However, the continued softness in employment and lack of wage growth suggests that any boost to household consumption this quarter will likely prove temporary."

Output continued to increase in November, with the rate of expansion being the strongest registered in 33 months.

Growth of buying activity reached a record high with around 42 percent of respondents noting increasing quantities of purchases.

New order books expanded at an accelerated pace, with firms recording rising inflows of new business, attributed to successful marketing techniques and an upturn in domestic demand.

Despite the sharp growth in domestic new orders, foreign demand contracted, but at a moderate rate. Companies in the non-oil private sector frequently commented on intense competition for new work in key export markets.

Meanwhile job creation remained muted overall, partly reflecting easing business confidence.

Optimism moderated in the latest survey and remained well below the long-run average, despite positivity towards the impact of Expo 2020 on domestic demand.

Elsewhere, selling prices continued to fall for the third month running in November. The rate of discounting was moderate overall but slower than that registered in the previous survey, the bank said.