Emirates NBD UAE PMI™

3 Min | 04 August 2015

Business conditions improve at faster pace in July

Business conditions improve at faster pace in July

Dubai, August 4th, 2015: July data suggested that the UAE's non-oil private sector regained some of the growth momentum that was lost at the end of the second quarter. Output and new orders both rose at sharper rates, contributing to a robust overall improvement in business conditions. Job creation was also sustained at a solid pace. On the price front, data highlighted divergent trends in July. The rate of cost inflation picked up to the quickest since February, while charges fell for the fifth time in the past six months.

The survey, sponsored by Emirates NBD and produced by Markit, contains original data collected from a monthly survey of business conditions in the UAE non-oil private sector.

Commenting on the Emirates NBD UAE PMI^TMJean-Paul Pigat, Senior Economist at Emirates NBD, said:
"July's PMI is another indication that growth in the UAE's non-oil economy is proving resilient in the face of a challenging regional and global economic environment. The rebounds in output and new orders were particularly encouraging, and we expect this momentum to continue through the remainder of 2015."

Key Findings

PMI ticks up from June's recent low
Marked expansions in output and new orders
Selling prices fall for fifth time in six months

Rising from June's 22-month low of 54.7 to 55.8, the headline seasonally adjusted Emirates NBD UAE Purchasing Managers' Index™ (PMI) – a composite indicator designed to give an accurate overview of operating conditions in the non-oil private sector economy – was consistent with a robust improvement in July. Growth at the start of Q3 was broadly in line with the average seen over the second quarter (56.0), but remained weaker than the trend recorded so far this year (56.8).

The overall acceleration was mainly driven by faster expansions in output and new business during July. The respective rates of growth were marked overall, having quickened from the recent lows seen in June. Commercial initiatives, new product launches and new client wins were all mentioned as factors behind higher new work. Subsequently, stronger order books were reported to have supported output growth.

Reflective of the trend seen for total new orders, exports rose more quickly in July. Furthermore, the latest increase was strong in the context of historical data.

Greater business requirements led to another expansion in purchasing activity at UAE non-oil private sector firms. The respective index picked up from June's near-two year low to signal a marked increase, similar to those seen for output and new work intakes. As a result, pre-production inventories rose at the fastest pace since February.

Non-oil private sector employment in the UAE continued to increase in July, marking a 43-month period of job creation. The rate of hiring was unchanged from June's solid pace, and remained in line with the average noted over six years of data collection. A number of panellists associated workforce growth with the start-up of new projects.

Meanwhile, cost pressures intensified in July, amid faster rises in both purchase prices and salaries. The rate of input price inflation picked up to a five-month high, but remained subdued relative to the series average.

In contrast, prices charged by UAE non-oil private sector companies decreased in July. Although marginal, the latest fall was the fifth in the past six months. Some firms saw their pricing power diminish as they attempted to secure new business.

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