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SHARP RISE IN NEW BUSINESS

Activity in the sector rose substantially in December,
to the greatest extent since August 2015.

UAE non-oil sector growth speeds to 16-month high

DUBAI, January 4, 2017

The UAE’s non-oil private sector continued to see strengthening growth momentum at the end of 2016, hitting 16-month highs amid reports of improving economic conditions, according to a new study released by Emirates NBD.

Output rose at a sharper pace as new orders increased markedly amid a return to growth of new export business, said 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.

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.

The index ticked up to 55.0 in December from 54.2 in November, thereby signalling a marked monthly improvement in the health of the non-oil private sector, and one that was the strongest since July.

On the price front, a further rise in input costs was registered but competitive pressures and promotional offers meant that output prices decreased again.

Khatija Haque, head of Mena Research at Emirates NBD, said:  “The Emirates NBD PMI indicates a solid expansion in the non-oil private sector in Q4 2016.  Strong gains in output and new orders have been hard-won however, with firms continuing to offer discounts and promotions in order to secure orders. Overall, the PMI averaged 53.9 in 2016, well below the 2015 average of 56.0, reflecting slower growth this year.”  

Key findings

•    Sharp and accelerated increase in business activity

•    New export orders rise for first time in six months

•    Output prices continue to fall despite cost inflation

Higher new orders, improving economic conditions and marketing activities all contributed to output growth. Activity rose substantially over the month, and to the greatest extent since August 2015.

New business rose at a sharp pace that was broadly in line with that seen in the previous month. Improving client demand and the efforts of sales teams contributed to the rise. Meanwhile, new export orders returned to growth, ending a five-month sequence of decline.

Efforts to secure sales in a competitive environment meant that output prices decreased in December in spite of a further rise in cost burdens. Charges have now declined in each of the past 14 months. Overall input prices increased at a faster pace amid sharper inflation of both purchase prices and staff costs. Purchase prices have risen in three successive months, with the latest increase the fastest in this sequence.

There were signs that operating capacity was sufficient to deal with current workloads despite a marked increase in new work during December. Backlogs of work declined for the first time in 32 months, while the rate of job creation remained modest as the vast majority of respondents (96 per cent) opted to leave their staffing levels unchanged.

Higher output requirements led firms to increase their purchasing activity in December. The rate of expansion was sharp and unchanged from that seen in November. Stocks of purchases also continued to rise, albeit at a slightly weaker pace than seen in the previous month.

As has been the case throughout the survey’s history to date, suppliers’ delivery times shortened in December. The latest improvement in vendor performance was marked, and attributed by respondents to requirements for faster deliveries. – TradeArabia News Service




Tags: Emirates NBD | Private sector |

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