Emirates NBD UAE PMI™

PMI hits six-month high amid sharp rise in output

Dubai, September 3^rd, 2015: Growth of the UAE's non-oil private sector accelerated further from June's recent low in August. Business conditions improved at the strongest rate in six months, driven by sharper expansions in output and new orders. Marked growth of new work resulted in greater pressure on operating capacity, however, as backlogs of work rose at the quickest pace since the survey began in August 2009. On the price front, charges fell for the sixth time in seven months, contrasting with a further rise in input costs.

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^TM, Khatija Haque, Head of MENA Research at Emirates NBD, said.

"The sharp rise in the UAE PMI in August confirms our view that Ramadan likely contributed to the softer readings in June and July. Encouragingly, new orders and output growth readings remain high, suggesting strong domestic demand. Slower growth in export orders last month may reflect the impact of currency appreciation relative to other emerging markets."

Key Findings

Marked expansion in output supports robust improvement in business conditions
New business rises at faster pace, despite slower export growth
Survey-record increase in backlogs of work

Adjusted for seasonal influences, the headline 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 - climbed to a six-month high of 57.1 in August, from 55.8 in July. The latest reading was indicative of a robust improvement in business conditions, and pointed to a further acceleration in growth from the 22-month low seen at the end of Q2.

The rise in the headline index was underpinned by sharper growth of two of its main components in August, namely output and new orders. Activity rose at the fastest pace since February, while the rate of expansion in new business was a four-month high. Anecdotal evidence linked output growth to stronger client demand, which was in turn attributed to promotional activities and a general improvement in market conditions.

That said, data suggested that a slowdown in export growth weighed on total new work during August. Although solid, the rate of expansion eased to a two-year low.

Purchasing activity at UAE non-oil private sector firms rose further in August, extending the current sequence of growth which has run for more than five years. The pace of increase picked up to a seven-month high, similar to the trends seen for output and new work inflows. Subsequently, input stocks rose more quickly in August.

Non-oil private sector employment in the UAE also increased, reflective of greater business requirements. However, the rate of job creation was only moderate overall, and remained below the average registered in 2015 so far.

A further by-product of stronger order books was growth of outstanding business in August. In fact, the rate of backlog accumulation quickened to a survey-record high.

Meanwhile, average tariffs decreased for the sixth time in the past seven months during August. This was despite another solid rise in total input costs. According to panellists, greater competition was the main factor placing downward pressure on selling prices, although the rate of decline was only slight overall.

In contrast, the rate of cost inflation was at a seven-month high, helped by further rises in both salaries and purchasing costs.

-Ends-

The next UAE PMI Report will be published on October 5^th 2015 at 09:30 (DUBAI)

For further information, please contact:
Ibrahim Sowaidan
Head - Group Corporate Affairs
Emirates NBD
Telephone: +971 4 609 4113 / +971 50 6538937
e-mail: ibrahims@emiratesnbd.com

Tricia Rego
ASDA'A Burson-Marsteller; Dubai, UAE
Tel: 971-4-4507600; Fax: 971-4-4358040
Email: tricia.rego@bm.com

Khatija Haque
Head of MENA Research, Emirates NBD
Email: KhatijaH@emiratesnbd.com

Joanna Vickers
Corporate Communications
Markit
Tel: +44-207-260-2234
Email: joanna.vickers@markit.com

Philip Leake
Economist
Markit
Tel: +44-1491-461014
Email: philip.leake@markit.com

The Emirates NBD UAE Purchasing Managers' Index is based on data compiled from monthly replies to questionnaires sent to purchasing executives in approximately 400 private sector companies, which have been carefully selected to accurately represent the true structure of the United Arab Emirates non-oil economy, including manufacturing, services, construction and retail. The panel is stratified by Standard Industrial Classification (SIC) group, based on industry contribution to GDP. Survey responses reflect the change, if any, in the current month compared to the previous month based on data collected mid-month. For each of the indicators the 'Report' shows the percentage reporting each response, the net difference between the number of higher/better responses and lower/worse responses, and the 'diffusion' index. This index is the sum of the positive responses plus a half of those responding 'the same'.

The Purchasing Managers' Index™ (PMI™) is a composite index based on five of the individual indexes with the following weights: New Orders - 0.3, Output - 0.25, Employment - 0.2, Suppliers' Delivery Times - 0.15, Stock of Items Purchased - 0.1, with the Delivery Times index inverted so that it moves in a comparable direction.

Diffusion indexes have the properties of leading indicators and are convenient summary measures showing the prevailing direction of change. An index reading above 50 indicates an overall increase in that variable, below 50 an overall decrease. Markit do not revise underlying survey data after first publication, but seasonal adjustment factors may be revised from time to time as appropriate which will affect the seasonally adjusted data series.

About Emirates NBD
Emirates NBD is a leading banking Group in the region. As at 30th June 2015, total assets were AED 388.1 Billion, (equivalent to approx. USD 105 Billion). The Group has a leading retail banking franchise in the UAE, with more than 220 branches and over 900 ATMs and CDMs in the UAE and overseas. It is a major player in the UAE corporate and retail banking arena and has strong Islamic banking, Global Markets & Treasury, Investment Banking, Private Banking, Asset Management and Brokerage operations.

The Group has operations in the UAE, Egypt, the Kingdom of Saudi Arabia, Singapore, the United Kingdom and representative offices in India, China and Indonesia.

The Group is an active participant and supporter of the UAE's main development initiatives and of the various educational, environmental, cultural, charity and community welfare establishments.

About Markit
Markit is a leading global diversified provider of financial information services. We provide products that enhance transparency, reduce risk and improve operational efficiency. Our customers include banks, hedge funds, asset managers, central banks, regulators, auditors, fund administrators and insurance companies. Founded in 2003, we employ approximately 4,000 people in 11 countries. Markit shares are listed on Nasdaq under the symbol MRKT. For more information, please see www.markit.com.

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