Dubai, April 5th, 2016: March data signalled a second consecutive pick-up in the rate of improvement in the health of the UAE's non-oil private sector. Business conditions improved at the strongest pace in four months, mainly driven by sharper rises in output and new orders. Notably, total new work increased more quickly in spite of a renewed fall in exports. Both employment and input stocks remained in growth territory, but the respective rates of expansion eased slightly. On the price front, input costs rose only modestly, meaning that companies were able to reduce their tariffs amid greater competition.
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 PMITM, Khatija Haque, Head of MENA Research at Emirates NBD, said.
"While the improvement in the Emirates NBD UAE PMI in March is encouraging, the average PMI for Q1 2016 signals a further slowdown in the non-oil private sector of the UAE at the start of this year. Nevertheless, the solid growth in output and new orders in the first quarter suggests that domestic demand is holding up well despite the headwinds of a strong USD and low oil prices."
Key Findings
- Faster expansions in output and new work...
- ...but exports fall for first time in six months
- Fifth successive decline in charges
Adjusted for seasonal factors, 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 four-month high of 54.5 in March. Up from 53.1 in February, the latest figure indicated that growth had continued to rebound from January's near-four year low. That said, the improvement in business conditions across the first quarter (53.4) was the weakest on average since Q1 2012.
Growth of the non-oil private sector as a whole was supported by higher output and new work during March. In particular, output rose at the quickest rate since last September, helped by enhanced marketing efforts and incoming new projects. New business also increased at a faster pace. However, the expansion was subdued relative to the long-run trend, with data highlighting weakness in international demand. New export orders fell for the first time in six months, albeit only marginally.
The sharp rise in output requirements was reflected by firms' purchasing during March. Growth of input buying picked up to a four-month high, with panellists commenting on stronger-than-expected sales. Firms were also upbeat towards future demand, leading them to build up their pre-production inventories. That said, the rate of accumulation was only modest overall.
Employment in the UAE's non-oil private sector increased further in March, extending the current sequence of job creation to 51 months. The rate of hiring eased since February, however, and was muted in the context of historical data. Meanwhile, backlogs of work rose only fractionally, with some companies suggesting that they had become more efficient in production.
Prices data pointed to subdued cost pressures in March. The rate of input price inflation was only modest overall, despite accelerating to the fastest so far in 2016. The rise in total input costs was restricted by a marginal drop in salaries - the first recorded since December 2011. Subsequently, businesses were able to cut their tariffs for the fifth straight month. Increased competition was cited as the main reason behind the fall.
-Ends-
The next UAE PMI Report will be published on May 3rd 2016 at 09:30 (DUBAI) / 05:30 (UTC)
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 Kaul
ASDA'A Burson-Marsteller; Dubai, UAE
Tel: 971-4-4507600; Fax: 971-4-4358040
Email: tricia.kaul@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 31st December 2015, total assets were AED 406.6 Billion, (equivalent to approx. USD 110.7 Billion). The Group has a leading retail banking franchise in the UAE, with more than 220 branches and over 940 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.
The intellectual property rights to the Emirates NBD UAE PMI provided herein are owned by or licensed to Markit. Any unauthorised use, including but not limited to copying, distributing, transmitting or otherwise of any data appearing is not permitted without Markit's prior consent. Markit shall not have any liability, duty or obligation for or relating to the content or information ("data") contained herein, any errors, inaccuracies, omissions or delays in the data, or for any actions taken in reliance thereon. In no event shall Markit be liable for any special, incidental, or consequential damages, arising out of the use of the data. Purchasing Managers' Index and PMI are either registered trade marks of Markit Economics Limited or licensed to Markit Economics Limited. Emirates NBD use the above marks under licence. Markit is a registered trade mark of Markit Group Limited.
Press Release 2016
