UAE's non-oil sector improves slightly in November on higher output
But firms slashed prices to the lowest level since 2009
The UAE's non-oil sector advanced slightly in November thanks to an increase in output and new orders as companies reduced prices to the lowest level since the 2009 recession, according to a new survey.
The seasonally-adjusted Emirates NBD UAE Purchasing Managers’ Index, a composite indicator that gives an overview of operating conditions in the non-oil private sector economy, rose to 55.8 in November from 55 in October, the lender said on Thursday. A reading above 50 indicates expansion, while a reading below 50 signals contraction. The report is sponsored by Dubai’s biggest lender and compiled by IHS Market. The average PMI year-to-date is 55.7, slighlty lower than 55.9 recorded in the same period last year.
“Central to the improvement in business conditions were sharp and accelerated rises in both output and new orders. Panellists linked increased output to higher new orders, alongside marketing and promotional activity,” Emirates NBD said.
“New business increased to the greatest extent since June, with new export order growth quickening to a four-month high. A number of panellists reported higher new orders from customers in other GCC countries.”
The UAE has been undertaking a raft of measures to propel growth, particularly to expand non-oil GDP which accounts for 70 per cent of the economy. These measures include waiving corporate fines, offering long-term visas and implementing a three-year Dh50 billion stimulus plan in Abu Dhabi that was announced in June.
Higher exports in November contributed to the expansion in the non-oil sector, with new export orders growing at the fastest pace in four months.
Firms in the UAE, however, have lowered their prices to attract new orders, according to the survey.
“Selling prices in the UAE fell at the fastest rate since the 2009 recession in November, with the output price index declining to 47 from 48.7 in October,” said Khatija Haque, head of MENA Research at Emirates NBD. “That input costs rose at the fastest rate since January even as firms were cutting output prices speaks to the challenging business environment and the pressure this is putting on firms to compete on price.”
Updated: December 6, 2018 09:59 AM