Growth of the UAE’s non-oil private sector slowed to the slowest rate in three months in July, according the data from the seasonably-adjusted Emirates NBD Purchasing Managers’ Index (PMI).
According to the PMI, although output growth slowed to a three-month low, the rate of expansion remained sharp overall and above the series’ average. Emirates NBD noted that businesses reported that strong demand for goods and services led to higher output requirements.
Additionally, new orders from abroad were found to have increased at the sharpest rate in three years during July, with many firms attributing the improvement to stronger demand in other GCC countries and in Europe. In overall terms, growth was found to have eased to a four-month low, although it remained solid when placed in historical context.
The data also shows that backlogs of work increased steeply in July, although at a slower rate than in June. Despite the levels of work outstanding, however, the hiring of additional staff was found to be taking place at the slowest rate over the last two years.
Khatija Haque, the head of MENA Research at Emirates NBD, noted that the rate of input cost inflation remained muted.
“While input cost inflation remained relatively modest in July compared with earlier this year, firms continued to lower average selling prices, with output prices declining for the third month in a row,” she said.
“The continued squeeze on firms’ margins is likely a key factor in the soft employment survey, as firms remain under pressure to contain costs and boost efficiency."
Business confidence was also found to have eased slightly after a survey-high recorded in June, but remained strong overall and was the fourth highest in the six years in which the PMI has been carried out.
