UAE PMI hits 19-month high in March on higher output, new orders

Non-oil private sector growth in the United Arab Emirates (UAE) picked up to a 19-month high in March, over the previous month driven by sharper increases in output and new orders, as well as a record rise in stocks of purchases, a monthly survey of businesses showed.

The seasonally-adjusted Emirates NBD UAE Purchasing Managers’ Index (PMI) rose to 56.2 from 56 in February. The average for the first quarter of 2017 stood at 55.8 – the strongest in one-and-a-half years.

“The latest PMI survey for the UAE points to encouraging growth in the non-oil economy through the first quarter of 2017,” Tim Fox, chief economist at Emirates NBD, said in a statement.

“What was particularly notable in this report was the degree of optimism among local firms about the potential for further improvements in client demand, which was evident in a strong rise in purchasing activity,” he added.

The increase in the seasonally headline index was supported by sharper growth of business activity, with the rate of expansion rising the sharpest in 25 months.

Growth in new projects helped boost output growth, indicating a general improvement in economic conditions and market demand, the statement said.

Expansion in new order book volumes rose to a 19-month high. New orders rose and new export business also expanded in March.

“Reflective of increased output requirements, firms increased their staffing levels. However, the rate of job creation was only modest,” the statement said, adding that the rate of backlog accumulation edged up to a six-month high.

Buying levels improved and the rate of inventory accumulation accelerated to a survey-record high, as client demand picked up pace.

Companies reported increased cost pressures amid a general rise in market prices. The rate of overall input price inflation quickened in March. However, firms registered no change in output prices, the statement said.

The 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.