UAE non-oil business growth rises in June on output, new orders

Non-oil private sector growth in the United Arab Emirates improved during June on faster output and new order growth, according to a survey of companies released Tuesday.

The seasonally adjusted Emirates NBD UAE Purchasing Managers' Index, which covers manufacturing and services sectors, rose to 55.8 in June from 54.3 in May.

A reading of above 50 indicates expansion, while below 50 points to contraction.

“The rise in output and new orders in June is encouraging, although we note that firms continued to reduce selling prices on average in order to support demand and order growth,” Khatija Haque, head of MENA research at Emirates NBD, said in a statement.

“The survey also highlights the lack of employment growth despite strong the strong increase in new work last month,” she added.

Employment sub-index declined slightly to 50.4 from 50.7 in May. 

The surveyed firms also cited increased marketing efforts, which contributed to new order growth. External demand, meanwhile, softened slightly in June, with new export orders declining.   

The business optimism index fell to 56.5 in June, the second-lowest level on record, the survey report said. However, businesses remain optimistic about the coming year, it added.

Just under 13 percent of firms surveyed said they expect output to be higher in about twelve months, compared to 23.6 percent in May. 

Stocks of purchases, meanwhile, increased sharply in June, with the sub-index rising to 57.3 from 54.7 the previous month, “suggesting that firms do expect output and new work to remain strong in the coming weeks,” the report said. 

The average PMI reading for Q2 2017 was 55.4, marginally lower than Q1 2017 and in line with a strong rate of non-oil private sector growth in the UAE.

The second quarter reading was also higher than Q2 2016.

“Overall, however, the PMI data for H1 2017 supports our view that the non-oil sectors have grown at a faster pace relative to H1 2016,” Haque said.