Growth in the UAE's non-oil private sector economy in August grew at the fastest pace in 30 months on the back of a “sharp expansion” in new orders and output, an August PMI survey shows.
The latest Emirates NBD PMI, a key gauge of the nation’s non-oil economy, rose to 57.3 last month from 56 in July due to a record increase in company inventories – the largest in the survey’s history. Companies attributed the boost in new orders to new client wins leading to new projects, enhanced marketing initiatives and good quality products.
“The August PMI survey shows a strong expansion in the non-oil private sector, underpinned by sharply higher output, new orders and inventories,” said Khatija Haque, the head of Mena research at Emirates NBD. "Firms have indicated that new projects and competitive pricing are supporting demand and activity in the non-oil sector. This is in line with our view that investment ahead of Expo 2020 will be the key driver of the UAE’s non-oil growth over the next few years.”
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Emirates NBD sponsors the monthly PMI survey of business conditions in the country’s non-oil private sector by the financial services firm, IHS Markit. A reading above 50 indicates growth in the country's non-oil economy, while a figure below 50 indicates a contraction.
According to the survey, the ongoing upturn in new business led to more job creation in August though the increase was marginal.
The report also noted that new export orders rose for the first time in three months, with other GCC countries cited as key sources of international demand. However, the rate of growth was marginal.
UAE firms continued to face input cost pressures due to higher purchasing costs. On the other hand, output charges stabilised during August as companies were reportedly unable to pass on higher cost burdens amid intensive competition putting an end to a four-month run of falling output prices.
Overall, business confidence remained optimistic in the UAE, according to the report, as the companies surveyed expected further improvement in market demand and economic conditions in the coming months.
