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Today sees the release of March data from the Emirates NBD Purchasing Managers’ Index® (PMI®) for the UAE. The survey, compiled by IHS Markit, contains original data collected from a monthly survey of business conditions in the UAE non-oil private sector.
Commenting on the UAE PMI® survey, Khatija Haque, Head of MENA Research at Emirates NBD, said:
“After a surprisingly weak February reading, it was encouraging to see the headline PMI recover to a 55-handle in March. 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. Employment was also marginally positive last month, although fewer than 3% of firms surveyed reported hiring in March. 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.”
The main findings of the March survey were as follows:
- Rates of growth in output and new orders accelerate
- Staffing levels stabilise following drop in previous month
- Business confidence reaches new peak amid signs of improving demand
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 – recovered to 55.7 in March from the 28-month low of 53.4 in February. The latest reading signalled a solid monthly improvement in the health of the non-oil private sector.
The improvement in business conditions reflected sharper increases in output, new orders and stocks of purchases, as well as a return to job creation. These all in some way were linked to anecdotal evidence citing signs of an improvement in market demand during the month.
New orders increased at a marked pace, with growth in line with the series average. Some panellists suggested, however, that discounts were offered in order to secure sales in a competitive environment. Output prices decreased for the sixth successive month in March. Competitive pressures were also evident further up supply chains, with firms’ purchase costs rising only slightly.
The rate of expansion in new export orders quickened at the end of the first quarter, recovering from February’s 11-month low amid reports of greater new orders from other GCC countries and the US.
Higher customer demand and successful marketing fed through to another monthly rise in business activity. The rate of expansion quickened from February and was in line with that seen in January.
Employment levels stabilised in March, having fallen solidly in the previous month. Higher new orders encouraged some firms to take on extra staff, but others maintained cautious hiring policies. Backlogs of work, meanwhile, increased at the slowest pace for a year.
Non-oil companies raised their input buying at a near-record pace, while the pace of accumulation in inventories also picked up.
Finally, signs of stronger market demand provided a boost to business confidence, with optimism hitting a new record high at the end of the first quarter.
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