UAE non-oil private sector economy grows at softer pace in September

The slowdown was evident in foreign sales, amid headwinds for global trade and economy

The real estate sector, which along with construction employs 45.7 per cent of the UAE's workforce grew by around 5 per cent in the second quarter of 2019. AFP

Business activity in the UAE’s non-oil private sector economy continued to accelerate in September, albeit at a slower pace for the fourth month running, as growth of new orders softened.

The headline seasonally adjusted IHS Markit UAE Purchasing Managers’ Index – an indicator that provides an overview of operating conditions in the non-oil private sector economy – fell to 51.1 in September from 51.6 in August. The figure signalled the weakest improvement in the health of the private sector since May 2010, impacted by a slowdown in demand growth amid a weakening global economy and escalating trade wars.

The slowdown was evident in foreign sales, which grew at the weakest pace since February. The over all expansion of the UAE non-oil economic activity was the second-softest in over six years. However, even the marginal rise in demand, and greater marketing push, helped companies reported a solid increase in overall non-oil economic output, according to the survey.

"After comparatively strong demand growth earlier this year, September data signalled the weakest monthly upturn in new orders …. companies reported further competitive pressures, while also seeing a slowdown in customer movement despite sustained price discounting,” David Owen, an economist at IHS Markit, said.

Although the business sentiment eased to the lowest in seven months, it was still stronger than the series average, with the Expo 2020 remaining a key source of optimism among panelists, Mr Owen noted.

The majority of firms kept employment levels unchanged, while only a few companies hired additional workers on the back of higher output requirements.

Meanwhile, a slower rise in new orders led firms to concentrate on reducing backlogs. The aggregate level of work-in-hand fell for the first time since December 2016, but only marginally.