The UAE’s non-oil private sector registered the highest growth in almost two years in January, which was backed by increased new orders and a rise in the economy.
The S&P Global UAE Purchasing Managers Index (PMI), which is seasonally adjusted, increased to 54.9 percent in January, the highest it had been in 11 months, compared to 54.2 percent in December.
David Owen, Senior Economist at S&P Global Market Intelligence, said, “UAE’s non-oil economy started the year on a solid footing, as new orders increased steeply, prompting firms to lift output and sharply expand their purchases.”
The new order volumes rose at the highest rate in 22 months, fuelled by the improvement of domestic demand and the favorable reception of new products and services. The new export orders, on the other hand, showed a relatively slight increase.
Nevertheless, companies also cited a fall in output due to increasing competition pressures, changing trade patterns, and increasing costs. The highest level of purchasing activity in six-and-a-half years was also involved in input cost inflation of 18 -months-high, with businesses experiencing increased prices in various materials.
There was no significant change in selling prices, implying that firms were absorbing increased costs to remain competitive. The time was reduced to deliver goods, and companies were able to replenish their stock faster. Capacity pressures were also relieved marginally since employment was still increasing, though marginally.
However, the business expectations were at their highest in 15 months since it was aided by the business confidence of an upturn in demand conditions. The non-oil private sector of Dubai experienced an increase in new business startups to a two-month high due to improved conditions of operation and the growth of client spending.
The improved business climate increased employment growth at a quicker pace and rejuvenated stocking. Overall activity improvement softened a bit since December, but was still strong. Business confidence also improved, reaching a four-month high on the expectation of stronger demand.
Thus, companies encountered a more rapid inflation of input costs, and it increased to the highest point in one and a half years.
