Business conditions in the United Arab Emirates in June improved at the fastest pace so far this year, while acceleration in the Saudi non-oil sector hit a six-month high, according to a monthly survey of business conditions in the two Gulf countries.

The Emirates NBD Purchasing Managers’ Index (PMI) is compiled by Emirates NBD, Dubai’s largest bank, and produced by IHS Markit. It gives an overview of operating conditions in the non-oil private sector economy of a country, with a figure of less than 50 indicating the market is declining and a figure of above 50 forecasting growth.

In June, UAE’s headline PMI rose to 57.1, up from 56.5 in May, driven by faster growth in output and stronger new business inflows, as backlogs of work build up at a record pace. (Read the full UAE PMI report here).

The rise in new orders was driven by business investment, promotional activity, as well as a strong client demand from export and domestic markets.

“The headline PMI rose to a 2018-high in June, reflecting a sharp increase in both export and domestic new orders as well as output,” Khatija Haque, head of MENA research at Emirates NBD, was quoted as saying in a press release accompanying the UAE PMI results on business conditions in June.

“In spite of this strengthening demand, there was almost no job growth or increase in wages in the UAE’s private sector last month, as firms continued to focus on efficiency and cost containment,” she added.

Meanwhile, in Saudi Arabia, growth in the non-oil sector has accelerated to six-month high in the month of June, driven by new order growth and a rise in output. (Read the full Saudi PMI report here).

In June, Emirates NBD Saudi Arabia PMI hit a record high for the year, reaching 55.0, up from 53.2 a month earlier. Saudi output growth In June also accelerated at the strongest pace since December 2017, while new orders increased at the fastest rate in six months

“The rise in the headline PMI to the highest level this year reflects a strong recovery in new orders (including export orders) and output.

Firms had been anticipating this for several months, as reflected in the very strong ‘future output’ readings since February,” Emirates NBD’s Haque said.

“It isn’t surprising then that the future output index declined sharply in June, with most firms now expecting their output to be relatively stable over the next twelve months,” she added.

Further Reading:
• Emirates NBD UAE PMI for June 2018
• Emirates NBD Saudi Arabia PMIfor June 2018
• Emirates NBD Egypt PMI for June 2018
• Business heads remain bullish about UAE's economic growth
• Saudi privatisation programme targets $11 bln non-oil revenues by 2020
• Robust project activity spurs UAE's non-oil GDP
• Non-oil sectors to drive UAE growth

(Reporting by Nada Al Rifai; Editing by Shane McGinley)
(nada.rifai@thomsonreuters.com)

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