Dubai: Growth of the UAE’s non-oil private sector eased in February, with business conditions improving at the weakest pace since September last year. The sector’s slowdown was largely reflective of a marked easing in output growth, alongside softer job creation. Weaker growth weighed on business confidence, which registered at a six-month low after falling sharply since the start of 2018. That said, demand conditions remained strong during February, as indicated by steep new order growth and the third consecutive month of rising new export business.
The survey, sponsored by Emirates NBD and produced by IHS Markit, contains original data collected from a monthly survey of business conditions in the UAE non-oil private sector.
Commenting on the UAE PMI® survey, Khatija Haque, Head of MENA Research at Emirates NBD, said:
“The February PMI survey shows a solid rate of growth in the UAE’s non-oil private sector, although it was slower than we’ve seen in recent months. The key components of the survey point to strong domestic demand but firms were notably more cautious than they were in January about the prospects for output growth over the coming 12 months.”
Key Findings
- Headline PMI falls to five month low of 55.1, from 56.8 in January
- Marked slowdown in output growth
- Inflows of new business remain strong
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 – eased to 55.1 during February, from 56.8 in January. The reading signalled the slowest improvement in business conditions for five months, matching that registered in September last year. That said, the rate of expansion remained sharp overall and above the long-run average.
Output growth in the non-oil private sector eased to a nine-month low during February. The rate of expansion remained sharp overall, however, and broadly in line with the series’ historical average. Some firms noted that strong demand led to higher output requirements.
Non-oil private sector firms reported an uptick in new business in the latest survey. The rate of growth accelerated since January and was sharp overall. Furthermore, February’s expansion was slightly above the average seen over course of 2017.
Supporting the improvement in domestic demand, new orders from abroad continued to rise for the third month running. That said, the rate of growth was only slight overall.
Job creation continued in the non-oil private sector, thereby extending the current sequence of employment growth to 22 months. That said, the rate of growth eased to its slowest since June 2017 and was subdued in the context of historical data.
In terms of cost pressures, input price inflation eased since the preceding survey. Despite the rate of inflation being solid overall during February, it fell below the long-run average. Meanwhile, output charges returned to decline in February’s survey. According to anecdotal evidence, the reduction in cost pressures allowed firms to reduce prices to stimulate client demand.
Business confidence among non-oil private sector firms in the UAE deteriorated sharply since January. The overall level of optimism was also well below the historical average.
-Ends-
The next UAE PMI Report will be published on April 3rd 2018 at 08:15 (DUBAI) / 04:15 (UTC)
The Emirates NBD UAE Purchasing Managers’ Index is based on data compiled from monthly replies to questionnaires sent to purchasing executives in approximately 400 private sector companies, which have been carefully selected to accurately represent the true structure of the United Arab Emirates non-oil economy, including manufacturing, services, construction and retail. The panel is stratified by Standard Industrial Classification (SIC) group, based on industry contribution to GDP. Survey responses reflect the change, if any, in the current month compared to the previous month based on data collected mid-month. For each of the indicators the ‘Report’ shows the percentage reporting each response, the net difference between the number of higher/better responses and lower/worse responses, and the ‘diffusion’ index. This index is the sum of the positive responses plus a half of those responding ‘the same’.
The Purchasing Managers’ Index™ (PMI®) is a composite index based on five of the individual indexes with the following weights: New Orders - 0.3, Output - 0.25, Employment - 0.2, Suppliers’ Delivery Times - 0.15, Stock of Items Purchased - 0.1, with the Delivery Times index inverted so that it moves in a comparable direction.
Diffusion indexes have the properties of leading indicators and are convenient summary measures showing the prevailing direction of change. An index reading above 50 indicates an overall increase in that variable, below 50 an overall decrease. IHS Markit do not revise underlying survey data after first publication, but seasonal adjustment factors may be revised from time to time as appropriate which will affect the seasonally adjusted data series.
About Emirates NBD
Emirates NBD is a leading banking Group in the region. As at 31st December 2017, total assets were AED 470.4 Billion, (equivalent to approx. USD 128 Billion). The Group has a significant retail banking franchise in the UAE and is a key participant in the global digital banking industry, with over 90 per cent of all financial transactions and requests conducted outside of its branches. The bank was declared the Most Innovative Financial Services Organization of the Year at the 2017 BAI Global Innovation Awards.
The bank currently has 230 branches and 1040 ATMs and SDMs in the UAE and overseas and a large social media following, being the only bank in the Middle East ranked among the top 20 in the ‘Power 100 Social Media Rankings’, compiled by The Financial Brand. It is a major player in the UAE corporate and retail banking arena and has strong Islamic Banking, Global Markets & Treasury, Investment Banking, Private Banking, Asset Management and Brokerage operations.
The Group has operations in the UAE, Egypt, the Kingdom of Saudi Arabia, India, Singapore, the United Kingdom and representative offices in China and Indonesia.
The Group is an active participant and supporter of the UAE’s main development and community initiatives, in close alignment with the UAE government’s strategies, including financial literacy and advocacy for inclusion of People with Disabilities under its #Together Limitless platform. Emirates NBD Group is an official premier partner of EXPO 2020. For more information, please visit: www.emiratesnbd.com
About IHS Markit (www.ihsmarkit.com)
IHS Markit (Nasdaq: INFO) is a world leader in critical information, analytics and expertise to forge solutions for the major industries and markets that drive economies worldwide. The company delivers next-generation information, analytics and solutions to customers in business, finance and government, improving their operational efficiency and providing deep insights that lead to well-informed, confident decisions. IHS Markit has more than 50,000 key business and government customers, including 85 percent of the Fortune Global 500 and the world’s leading financial institutions. Headquartered in London, IHS Markit is committed to sustainable, profitable growth.
IHS Markit is a registered trademark of IHS Markit Ltd. All other company and product names may be trademarks of their respective owners © 2018 IHS Markit Ltd. All rights reserved.
The intellectual property rights to the Emirates NBD UAE PMI® provided herein are owned by or licensed to IHS Markit. Any unauthorised use, including but not limited to copying, distributing, transmitting or otherwise of any data appearing is not permitted without IHS Markit’s prior consent. IHS Markit shall not have any liability, duty or obligation for or relating to the content or information (“data”) contained herein, any errors, inaccuracies, omissions or delays in the data, or for any actions taken in reliance thereon. In no event shall IHS Markit be liable for any special, incidental, or consequential damages, arising out of the use of the data. Purchasing Managers’ Index™ and PMI® are either registered trade marks of Markit Economics Limited or licensed to Markit Economics Limited. Emirates NBD use the above marks under licence. IHS Markit is a registered trade mark of IHS Markit Limited.
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© Press Release 2018