Business activity in the UAE's non-oil private sector climbed to a four-month high in July, while employment numbers rose, as companies continue to bounce back from the fallout of the Iran war.
The seasonally adjusted S&P Global UAE Purchasing Managers' Index climbed to 52.7 from 50.8 in June. A reading above 50 indicates growth in economic activity, while one below indicates a contraction.
The latest print was the highest recorded since March and pointed to a moderate improvement in the non-oil private sector’s health.
The broader economy has faced a slowdown due to the impact of the war, resulting in cautious client activity and competitive pressures, but the underlying fundamentals remain solid.
“July data signalled some relief for UAE companies after the PMI dropped perilously close to the 50.0 neutral threshold in June, as a restoration of business confidence and a period of smoother trade flows allowed for a pick-up in growth,” said David Owen, principal economist at S&P Global Market Intelligence.
“Although the July PMI reading of 52.7 remains a step lower than the levels observed prior to the Middle East conflict, it provided some assurance that businesses were coping better after a heavily disrupted second quarter.”
The labour market in the UAE, the Arab world’s second-largest economy, which experienced one of the sharpest contractions in June since the height of the Covid-19 pandemic, also bounced back at the beginning of the third quarter.
Workforce levels returned to growth in July, with firms citing “stronger demand” as a justification for “renewed hiring”.
However, business confidence towards future output faded for the third consecutive month to its lowest since March, with only 7 per cent of firms predicting an uplift over the coming year.
“The volatile situation in the Strait of Hormuz continues to make the future uncertain and kept price pressures elevated in July,” Mr Owen said.
