UAE's non-oil growth eases to 10-month low in March, Emirates NBD says

Confidence in the non-oil economy, however, has improved since February and remains positive overall

Emirates NBD started strategic rights issue to raise up to Dh6.45 billion to support  its future growth. Chris Whiteoak / The National

The UAE’s non-oil private sector economy slowed in March with businesses conditions improving at the weakest rate in 10 months as an easing of new orders, softer output, and stagnant foreign demand for goods and services impacted growth, according to the latest survey by Emirates NBD.

The seasonally adjusted purchasing managers’ index – a composite indicator designed to give an overview of operating conditions in the non-oil private sector economy – dropped to 54.8 in March, from 55.1 in February, the most muted rate of expansion since May last year.

A reading above 50 suggests the non-oil economy is growing, while a reading below 50 suggests a contraction. Despite slower growth, data indicated a marked expansion overall, one that was fractionally above the long-run average. In terms of costs, firms took advantage of easing price pressures by reducing output charges in an attempt to spur client demand.

“Although the UAE’s PMI score continues to moderate from the pre-VAT boost enjoyed at the end of 2017, it remains firmly in expansionary territory, and continued discounting by firms should help stimulate demand,” said Daniel Richards, the Middle East and North Africa economist at Emirates NBD. “Firms are more positive towards future output than they were last month, reflecting new orders that remain strong at 60.2.”

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Incoming new business remained in sharp growth territory, posting above the long-run average in March. The rate of expansion was at a four-month low, however. Output growth softened to a 23-month low.

Private sector firms in the UAE’s non-oil private sector reported easing job creation during March and the rate of employment growth slipped to a 17-month low. In terms of inflation, price pressures eased further since the recent peak at the start of 2018.

Confidence in the non-oil economy improved since February, and was positive overall. New project wins alongside an expected global economic upturn underpinned positive sentiment last month, according to the survey.