The UAE’s non-oil private-sector has improved in March, regaining momentum amid growth in output and orders, as compared with the 28-month low performance in February.
The headline seasonally adjusted Emirates NBD UAE Purchasing Managers’ Index (PMI) rose to 55.7 in March from 53.4 in February, according to a report compiled by IHS Markit for Emirates NBD. A reading above 50 indicates expansion, while a reading below that signals contraction.
Output, new orders, and stocks of purchases of non-oil private sector companies in the UAE have increased sharply in March, as market demand improved during the third month of 2019, the survey said.
“The acceleration in output and new orders suggests that demand has improved, although this was likely supported by further declines in selling prices in March. The environment remains competitive for businesses,” head of MENA Research at Emirates NBD Khatija Haque commented.
Panelists reported that new orders accelerated at a marked pace, while output prices dropped for the sixth consecutive month in March as “discounts were offered in order to secure sales in a competitive environment,” the survey added.
Expansion rate in new export orders increased at the end of the first quarter of 2019, compared to February’s 11-month low rate.
Staffing levels were stable last month, versus the low-rate of employment in February, according to the survey.
“Employment was also marginally positive last month, although fewer than 3% of firms surveyed reported hiring in March,” Haque said.
Some firms added extra staff on the back of new orders, but other companies kept their hiring policies unchanged.
Furthermore, business backlogs of non-oil private sector companies in the UAE increased at the slowest pace for a year in March.
Non-oil companies in the Gulf state have boosted their input buying at a near-record pace, while “the pace of accumulation in inventories also picked up,” the survey noted.
“The growth in inventories, together with a rise in the future output component suggests that businesses are more optimistic about their prospects than they have been in recent months,” head of MENA Research at Emirates NBD indicated.
Moreover, the survey indicated business confidence in the UAE may see further improvement on the back of solid market demand, in line with optimism marking a new record high at the end of the first quarter.