Non-Oil Private Sector Records Strong Growth in November
Att.Editors: The following item is from the Emirates News Agency (WAM)
(WAM) - November’s Purchasing Managers’ Index (PMI) signalled a strong upturn for the United Arab Emirates (UAE) non-oil private sector, and the sharpest pace of expansion since August, according to the latest UAE PMI survey.
It added, "Steep growth in both output and new business contributed to the latest improvement in business conditions. Furthermore, firms responded to higher output requirements by increasing buying activity at the fastest pace in the survey’s history, whilst many respondents reported that they anticipate operating conditions to further improve in the next 12 months. In terms of inflation, average cost burdens rose at a solid pace, partly reflecting higher raw material prices."
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 UAE PMI survey, Khatija Haque, Head of MENA Research at Emirates NBD, said, "The PMI reading for November confirms our view that the UAE’s non-oil sector will likely see strong growth in the fourth quarter of this year, as both households and business will likely boost purchases before VAT comes into effect at the start of next year. However, the continued softness in employment and lack of wage growth suggests that any boost to household consumption this quarter will likely prove temporary."
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 to 57.0 in November, up from 55.9. The latest expansion was the strongest registered since August and above the series’ long-run average. The improvement partly reflected sharp growth in output and new orders in the non-oil private sector.
Output continued to increase during November’s survey period, thereby extending the current sequence of growth that began in February 2010. Furthermore, the rate of expansion was the strongest registered in 33 months.
In response to rising output requirements, growth of buying activity reached a record high during November. The data reflected around 42% of respondents noting increasing quantities of purchases.
New order books expanded at an accelerated pace in November, and at a rate that was above the historical series average. Firms linked successful marketing techniques and an upturn in domestic demand to rising inflows of new business.
Despite sharp growth in domestic new orders, foreign demand contracted in the latest survey. The rate of decline was moderate overall. Firms in the non-oil private sector frequently commented on intense competition for new work in key export markets. Furthermore, job creation remained muted overall in the context of historical data, partly reflecting easing business confidence. Optimism moderated in the latest survey and remained well below the long-run average, despite positivity towards the impact of Expo 2020 on domestic demand.
On the price front, selling prices continued to fall for the third month running in November. The rate of discounting was moderate overall and slower than that registered in the previous survey. According to anecdotal evidence, firms reduced output charges to stimulate client demand.
Average cost burdens rose at a solid rate during the latest survey period. November’s data thereby lengthened the current sequence of rising operating expenses to six months. (WAM)