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UAE non-oil sector regains momentum in Nov

DUBAI, December 5, 2016

The UAE’s non-oil private sector regained some growth momentum in November, thereby reversing the slowing trend seen in each of the prior three months, a report said.

 A robust expansion of new work was a key factor behind improving business conditions, according to the latest Emirates NBD UAE PMI.

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 – rose for the first time in four months during November. At 54.2, up from October’s six-month low of 53.3, the latest reading was above the 2016 average (53.8) and consistent with a robust improvement in business conditions.

Stronger demand also contributed to faster job creation and a marked rise in purchasing activity. Output also increased sharply, albeit at a slightly weaker pace than in October. On the price front, charges continued to fall in spite of higher purchasing costs. Some panellists indicated that they had offered discounts as part of sales initiatives.  

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 Emirates NBD UAE PMI, Khatija Haque, head of Mena Research at Emirates NBD, said: “The November PMI data is encouraging as it continues to point to strong activity growth in the UAE, even as external demand remains soft.  However, the environment remains competitive, and margins continue to be squeezed by rising input costs and declining output prices.”  

Key findings

•    Headline index ticks up having fallen for three straight months up until October
•    New orders rise at sharpest rate since August...
•    ...helped by marketing strategies including lower charges


Data showed that growth of new business was central to the rise in the headline index. The rate of expansion picked up from the relatively subdued pace seen in the preceding two months, and was marked overall. Surveyed firms attributed higher new orders to successful marketing initiatives, including price discounting. Companies lowered their charges on average for the thirteenth straight month.

The rise in total new work was hampered by another fall in new orders from abroad during November. The rate of decline eased to the weakest in the current five-month downturn, however, and was only modest overall.

Output meanwhile continued to increase substantially. Though slowing slightly since October, the rate of growth remained strong in the context of historical data. A number of respondents mentioned raising activity in response to new projects.

With new orders and output requirements rising sharply, growth of purchasing activity quickened in November. The rate of pre-production inventory building picked up as a result. Some firms associated higher stocks with healthy demand projections.

Jobs growth accelerated to a four-month high, with a number of businesses requiring extra manpower in order to cater for new projects. That said, the pace of hiring remained below the series average and only modest overall. Backlogs of work rose for the eleventh month in a row.

Finally, total input costs rose for the second straight month in November. Driven by higher purchase prices, the back-to-back rise contrasted with September’s reduction (the first in a year-and-a-half). Cost pressures had little impact on output prices, however, which fell further amid competitive pressures and efforts to attract clients. – TradeArabia News Service




Tags: UAE | Emirates NBD | non-oil | PMI index |

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