The rate of growth in the UAE non-oil economy picked up in July, reaching the strongest in two years supported by rebounding demand and sharp rise in new orders, a business survey showed.
The seasonally adjusted IHS Markit UAE Purchasing Managers' Index (PMI) – a composite indicator designed to give an accurate overview of operating conditions in the non-oil private sector economy – rose from 52.2 in June to 54.0 in July, pointing to a strong improvement in business conditions.
David Owen, Economist at IHS Markit, said: "UAE's non-oil sector enjoyed a busy start to the third quarter of the year, as firms saw the sharpest rise in new orders for two years amid soaring domestic sales and strengthening market confidence.”
The coronavirus situation in other parts of the world led to a third successive fall in export sales during July, with firms increasingly turning to domestic clients to help recover new business.
Lockdown measures also hit the supply of inputs at the start of the third quarter, particularly from Asia where rising COVID-19 cases led to tighter restrictions. This led to a quicker rise in input costs.
“New orders from abroad disappointed again in July as sales were hindered by pandemic-related measures around the world. With COVID-19 cases reaccelerating in Asia, firms also pointed to a worsening of supply chain problems,” Owen said.
July data suggested an increase in employment, due to efforts to expand sales departments. Whilst only marginal, the rate of job creation was the fastest since January 2019, the report said.
Firms also expanded their purchasing activity in July, after a slight decrease in June.
The business outlook for future non-oil activity remained positive in July. Firms expect economic conditions to improve on the back of easing COVID-19 restrictions and the Expo 2020. However, overall business expectations declined from the previous survey period.
(Reporting by Seban Scaria; editing by Daniel Luiz)
This article is provided for informational purposes only. The content does not provide tax, legal or investment advice or opinion regarding the suitability, value or profitability of any particular security, portfolio or investment strategy. Read our full disclaimer policy here.
© ZAWYA 2021