UAE non-oil private sector reports strongest year-to-date in June

UAE business confidence continued to improve in June
UAE non-oil private sector reports strongest year-to-date in June
The average cost burdens reported by non-oil private sector companies was found to have slowed down in June, with only a slight overall rate of input price inflation that was the weakest in three months.
By Bernd Debusmann Jr
Tue 03 Jul 2018 10:26 AM

The state of the UAE’s non-oil private sector improved to the highest levels seen year-to-date in June, bolstered by strong inflows of new business and output growth, according to new statistics from Emirates NBD.

In its seasonally adjusted UAE Purchasing Managers’ Index (PMI), Emirates NBD found that the expansion of the non-oil private sector was the strongest so far seen in 2018, and well above the series’ historical average.

Output growth was found to have risen to a seven year high in June. According to the statistics, rising output has been recorded continuously since February 2010, with the latest increase sharp overall. Anecdotal evidence suggests that higher business activity was associated with strong inflows of new work.

Additionally, business investment, promotional activity and strong client demand from both the domestic and the export markets was also linked to June’s steep expansion of new order books, the rate of growth of which was the strongest in the year-to-date.

Backlogs of work were also found to have increased at a record pace in June, reflecting a sharp improvement in new business and easing job creation.

The average cost burdens reported by non-oil private sector companies was found to have slowed down in June, with only a slight overall rate of input price inflation that was the weakest in three months.

Easing staff cost and raw material price inflation contributed to lower overall input cost inflation in June, with price discounting continued for the second month running, although at a softer extent than that recorded in May.

Business confidence was found to have spiked in June, with anecdotal evidence suggesting that business investment, marketing initiatives and an anticipated economic upturn underpinning positive sentiment.

Purchasing activity growth eased to a two-year low, although the pace of expansion remained solid overall. Additionally, stocks of purchases held at non-oil private sector firms increased at the slowest pace in 25 months during the most recent survey, with some firms noting that they had sought to streamline operations.

“The headline PMI rose to a 2018-high in June, reflecting a sharp increase in both export and domestic new orders as well as output,” said Khatija Haque, head of MENA research at Emirates NBD.

“In spite of this strengthening demand, there was almost no job growth or increases in wages in the UAE’s private sector last month, as firms continued to focus on efficiency and cost containment.”

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