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Thu 3 Nov 2016 02:00 PM

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UAE non-oil sector growth slows to 6-month low in October

Latest purchasing managers’ index shows subdued rise in new work was key factor behind slowdown

UAE non-oil sector growth slows to 6-month low in October

The UAE’s non-oil private sector lost further growth momentum in October, with business conditions recording the lowest improvement in six months, according to research from Emirates NBD.

The latest UAE Purchasing Managers’ Index from the Dubai-based bank dropped for the third month in a row during October.

The latest reading of 53.3 was the lowest since April, down from 54.1 in September. It was also beneath the series average of 54.5 – although it did remain consistent with an overall improvement in business conditions recorded by the bank.

The seasonally adjusted index is a composite indicator designed to give an accurate overview of operating conditions in the non-oil private sector economy, Emirates NBD said. The survey is produced in partnership with IHS Markit.

A relatively subdued rise in new work was a key factor behind the overall slowdown, as was a near-stagnation in employment, the research said.

It described the latest rise in employment as “negligible, with almost the entire survey panel (98 percent) seeing no change compared to September.

The research also noted that growth of new business was substantially slower than that for output in October – the rate of increase was little-changed from September’s 75-month low, it said.

Data showed that falling exports was a factor behind subdued demand, as well as overall slower market conditions.

However, output continued to rise sharply, although the rate of expansion slowed marginally to a four-month low.

Meanwhile, a combination of subdued demand and ongoing competitive pressures forced firms to cut their charges for the twelfth straight month, while purchases costs increased, albeit modestly, and overall purchasing activity rose at a weaker pace, the research added.

Khatija Haque, head of MENA Research at Emirates NBD, said: “Although the headline PMI index declined in October, output growth remains very strong.

“However export orders declined for the fourth consecutive month, contributing to a slowdown in total new orders growth since the summer. ‘

”Overall, growth momentum appears to have eased at the start of Q4 after a relatively strong Q3, but the data still points to solid expansion in the UAE’s non-oil private sector in October.”

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