PMI shows UAE non-oil business growth at six-month high in January

The seasonally adjusted Emirates NBD UAE Purchasing Managers’ Index, which covers manufacturing and services, rose to 55.3 last month from 55.0 in December. The 50-point level divides expansion from contraction.

Business confidence in January was at its highest level since July 2016. Jumana El Heloueh / Reuters
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The UAE’s non-oil business activity rose to a six-month high last month, thanks to a rise in new orders, higher output and improved demand from overseas, according to the latest data from Emirates NBD.

The Emirates NBD/IHS Markit purchasing managers’ index (PMI), which measures the economic confidence of business managers in the manufacturing and services industries, increased to 55.3 last month, up from 55.0 in December. A figure above 50 means businesses in the country are expanding, while below 50 signals a contraction.

The index, collected from a monthly survey of business conditions in the UAE non-oil private sector, had fallen to an average of 53.9 last year owing to the effect of low oil prices on the UAE economy.

“The January PMI data shows that output and new-order growth remains strong, and the improvement in export demand last month is particularly welcome after a relatively soft 2016,” said Khatija Haque, the head of Mena Research at Emirates NBD.

According to the index, business confidence last month was at its highest level since July 2016.

The rate of new business rose at its quickest rate in 16 months and the number of new export orders quickened to a 14-month high, prompting managers to increase purchasing to cater for existing and expected new orders.

The spate of buying activity meant that managers reported that the costs of goods and materials increased significantly, while staff costs remained almost static.

Companies reported that intense market competition meant that output charges decreased for the 15th consecutive month in January. However, the pace of reduction was slight overall and the weakest in five months.

In Saudi Arabia, where low oil prices have had a more dramatic impact on the local economy, the positive news was even more pronounced, with the PMI index rising from 55.5 in December to 56.7 – its highest level in a year and a half.

Output expanded at the strongest rate in 17 months because of an increase in market demand. Volumes of incoming new business rose at the sharpest pace in 14 months, with Saudi firms reporting an increase in new export work as firms offered competitive prices.

“The rise in Saudi Arabia’s PMI to the highest level in 17 months is an encouraging start to the year, particularly as it reflects faster output and new order growth in January,” said Ms Haque. “Firms also appear to be more optimistic about the coming 12 months.”

lbarnard@thenational.ae

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