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Growth in the UAE’s non-oil private sector regained some momentum in August after hitting its lowest level for almost three years in July ,a new survey of businesses showed on Wednesday, as firms received more new work, especially from foreign clients,
The seasonally adjusted S&P Global UAE Purchasing Managers' Index (PMI), increased to 54.2 in August, after dropping to a 34-month low of 53.7 in July. Despite the improvement in the health of the non-oil private sector, the rate of expansion was the second-softest in over a year-and-a-half.
"Although the UAE PMI picked up in August and was consistent with a solid expansion in non-oil business conditions, it remained weaker than the levels recorded earlier in the year, as fewer companies reported uplifts in activity,” David Owen, Senior Economist at S&P Global Market Intelligence.
New business growth quickened to a five-month high on strengthening domestic conditions and higher global demand. Many respondents noted that ongoing project work had also bolstered activity.
However, even though pressure on operating capacity receded as supply chains continued to recover and firms purchased more inputs, albeit at higher costs, lifting output prices in turn.
“Ongoing price mark-ups have the potential to curb demand, adding some uncertainty to the view that growth will continue unabated,” said Owen.
Hiring growth across the non-oil sector weakened in August and was the softest for seven months. While some firms added to their workforces to boost output, others made cuts to staffing levels.
Outlook for the future improved among the survey panelists with firms largely positive that domestic economic conditions will improve. Companies also suggested that strong sales pipelines would shore up output over the coming months.
Dubai PMI
Operating conditions in the Dubai non-oil private sector improved as demand growth picked up at a stronger pace in August, according to PMI survey data. Nevertheless, the rate of expansion in business activity slowed and was the least marked since September 2021.
Similarly, employment levels rose at a milder rate. Dubai non-oil firms continued to face upward pressure on their input costs in August.
(Writing by Brinda Darasha; editing by Daniel Luiz)
