UAE PMI hits 17-month high in Feb on higher output

A sharp rise in output and new orders in the United Arab Emirates’ non-oil private sector helped push the Emirates NBD purchasing managers’ index (PMI) to a 17-month high of 56.0 in February from 55.3 in January.

Output expanded at the fastest rate in 18 months, coming in at 63, driven by a sharp increase in inflows of new work, according to the Emirates NBD PMI report.

“The rise in the UAE PMI to the highest level since September 2015 suggests that demand has strengthened, both domestically and abroad,” Khatija Haque, head of MENA research at Emirates NBD, said in a statement.

“Higher oil prices have likely contributed to improved sentiment and business activity over the last few months,” she added.

Higher output and new work, however, did not have a material impact on job creation, with the employment index easing to 51.3 in February from 51.9 in January.  Staff cost pressures also remain contained, the report said.

Average selling prices increased in February, with this index rising to 51.1 – rising above 50 for the first time since October 2015. 

Meanwhile, input price inflation declined slightly, but input costs continued to rise at a faster rate than output prices. 

Surveyed companies increased their purchasing activity in February, in anticipation of future demand, the report said.  Inventories rose at the fastest rate in five months. 

Firms were also upbeat about the outlook for new work over the next year, with the business optimism index rising to a five-month high to 59.7.

The backlogs of work were largely unchanged from January and suppliers’ delivery times continue to shorten.

“Overall, we expect real GDP growth to accelerate to 3.4 percent this year from an estimated 3 percent in 2016,” the report said. 

The Emirates NBD PMI is based on data compiled from a survey of companies in manufacturing, services, construction, and other non-oil sectors.  A level over 50 indicates an increase, while below 50 indicates contraction.