UAE’s non-oil private sector continued to expand in August

How the UAE’s non-oil private sector performed in August: Purchasing manager indices (PMI) tracking non-energy sectors in the UAE recorded growth momentum on the back of a spike in new orders – specifically recording a jump new export orders, according to S&P Global’s PMI (pdf). The UAE’s PMI headline figure rose to 54.2 in August, up from 53.7 in July, holding above the 50.0 mark threshold.

REFRESHER- The all-important 50.0 mark is the threshold separating contraction from growth. Anything above 50 denotes expansion, while anything below indicates contraction.

An uplift in new orders accelerated non-oil business activity to a five month high, with new export orders growing at their quickest pace in nearly a year in response to international demand. In turn, purchasing activity also rose and input stockpiling marginally resumed.

Overall output levels rose at a steady but soft pace, albeit at the slowest paces recorded in the past three years. Delivery times dropped as vendors reshuffled their schedules. Work backlogs jumped up in August, yet the rate of accumulation was the softest in nearly eight months. Performance pressures eased in August, yet supply chains are still recovering from floods earlier this year and operations are still grappling with the response to Red Sea shipping disruptions.

Input costs and output pricing dragged down the indices: Output prices grew, albeit marginally, for the fourth month running in response to market cost pressures. The non-oil private sector also recorded a sharp upturn in average input costs in August, with expenses rising across a variety of operational sectors, including transport, IT equipment, raw materials and maintenance equipment. Employment rates fell in August, dropping to its softest rate in seven months.

Sentiment remained optimistic: Overall confidence was boosted in August after dipping to a six-month low in July, with non-oil firms forecasting domestic output growth to be sustained over the coming year. “Sales pipelines remain strong and firms have ample levels of outstanding work to complete,” Senior Economist David Owen said in the report.