The rate of growth of operating conditions in the UAE's non-oil economy in November reached the strongest in almost two-and-a-half years, according to a new business survey.
Though output and new business increased due to accelerated business activity triggered by Expo 2020 Dubai, business confidence dipped in November, but remained stronger than seen throughout much of the pandemic.
The IHS Markit UAE Purchasing Managers' Index posted 55.9 in November, up from 55.7 in October to its highest reading since June 2019. The index continued to signal a robust improvement in the health of the non-oil sector that was faster than the pre-pandemic trend.
According to the IHS Markit survey, firms in the Emirates highlighted a strong increase in demand as the country reopened to tourism and benefited from the Expo 2020, resulting in marked expansions in output and new business volumes midway through the fourth quarter.
"November data showed the UAE economy still running strong, with the rate of growth even accelerating from October when the start of Expo 2020 led to an upsurge in activity. In fact, the PMI climbed to its highest since June 2019, signalling that the event had helped lead the non-oil sector back to pre-COVID growth rates," , David Owen, Economist at IHS Markit, said
Input prices meanwhile rose at the slowest pace since May. The IHS Markit data indicated a further straining of profit margins as output charges were down in November. Higher costs were mostly related to a rise in raw material prices that was driven by global supply problems.
Export sales also increased, albeit at a much softer pace than total new business.
After five successive months of expansion, employment levels were largely unchanged in November. Business confidence dipped in November, but remained stronger than seen throughout much of the pandemic. According to the survey, several firms mentioned that high competition had dampened their sales forecasts and this impacted employment levels.
"Whilst higher than seen throughout much of the pandemic, business confidence was still subdued compared to the historical average in November, as firms indicated that high competition had clouded their sales forecasts," Owen said.
(Reporting by Seban Scaria, editing by Daniel Luiz)
Disclaimer: 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