Business conditions in the UAE’s non-oil private sector recovered momentum in March after dipping in February, with an increase in output, orders and job creation boosting confidence in companies, the latest report from Emirates NBD said.
The Dubai lender’s UAE Purchasing Managers’ Index – a composite indicator designed to give an overview of operating conditions in the non-oil private sector economy – rose to 55.7 last month from a 28-month low of 53.4 in February.
A reading above 50 indicates expansion in the economy and a reading below signals contraction. The latest figure signalled a “solid” monthly improvement in the health of the non-oil private sector, led by growth in output and new orders, according to Emirates NBD.
“After a surprisingly weak February reading, it was encouraging to see the headline PMI recover to a 55-handle in March,” said Khatija Haque, head of Mena research at Emirates NBD.
“The acceleration in output and new orders suggests demand has improved, although this was likely supported by further declines in selling prices in March.”
The overall environment remains competitive for businesses, she added. “Growth in inventories, together with a rise in future output suggests businesses are more optimistic about their prospects than they have been in recent months.”
Higher customer demand and successful marketing led to a rise in business activity in March, and employment was also more positive than in previous months, with staffing levels stabilising following a drop in February, according to the tracker.
However, fewer than 3 per cent of companies surveyed for the latest report said they hired new staff in March.
New orders increased in line with the series average growth rate, although discounts may have been offered to secure sales in a competitive environment, Emirates NBD said. The rate of expansion in new export orders quickened to recover from February’s 11-month low, driven by new orders from the GCC and US.
Such signs of stronger market demand boosted business confidence, recovering from in March February's 11-month low and was the strongest in the survey's history, surpassing the previous record seen in October 2018.
However, output prices decreased for the sixth successive month and supply chains came under pressure, with companies’ purchase costs rising only slightly. Backlogs of work increased at the slowest pace for a year, the Emirates NBD report added.