UAE non-oil private sector growth highest since Sept 2015

 

 

Business conditions in the UAE’s non-oil private sector saw the strongest growth since September 2015 last month, according to Dubai lender Emirates NBD’s monthly survey.

 The seasonally adjusted Emirates NBD UAE Purchasing Managers’ Index (PMI) reached a 17-month high of 56 in February, up from 55.3 in January. The latest reading was above its long-run average (54.5).

New business inflows rose sharply and at the fastest rate since September 2015, with survey participants linking the growth to strong underlying demand and better economic conditions.

A rise in new export orders also led companies to raise their output further. Growth of business activity also climbed to an 18-month peak last month.

Greater output requirements led firms to purchase more inputs and hire extra staff, the report found.

Buying levels increased to the greatest extent since last September, although the pace of job creation softened to the weakest in four months.

Input stocks also rose sharply and at the second-quickest pace in one-and-half years last month, it added.

Meanwhile, average input prices rose at a weaker rate during February in line with softer increases in purchasing prices and staff costs.

However, average selling prices rose for the first time in almost one-and-a-half years as firms passed on part of their additional cost burdens to clients.

Khatija Haque, head of MENA Research at Emirates NBD, said: “The rise in the UAE PMI to the highest level since September 2015 suggests that demand has strengthened, both domestically and abroad. Higher oil prices have likely contributed to improved sentiment and business activity over the last few months.”

Oil prices have risen after a deal signed by oil producers to cut supply came into effect on January 1.

The Organization of Petroleum Exporting Countries (OPEC) and several non-OPEC producers agreed in early December to reduce production by almost 1.8 million barrels per day (bpd).

Looking ahead, UAE non-oil private sector companies expect the favourable economic scenario to be sustained over the coming 12 months, with one-in-five companies forecasting output growth in the year ahead, the report found.

The level of positive sentiment was at a five-month high in February. Optimism reportedly reflected aggressive marketing campaigns, strong demand and new projects in the pipeline.

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