Dubai: Today sees the release of July data from the Emirates NBD Purchasing Managers’ Index® (PMI®) for the UAE. The survey, compiled by IHS Markit, contains original data collected from a monthly survey of business conditions in the UAE non-oil private sector.

Commenting on the UAE PMI® survey, Khatija Haque, Head of MENA Research at Emirates NBD, said:

The Emirates NBD Purchasing Managers’ Index (PMI) for the UAE declined to 55.8 in July from 57.1 in June, signalling the slowest rate of growth in the non-oil private sector in three months. Both output and new work, while still strong, were softer than in June. Notably, new export orders increased at the sharpest rate in three years, as firms reported stronger demand from other GCC countries and Europe.

Employment was broadly unchanged in July, with the index barely above the neutral level at 50.2. Year-to-date, the employment index averaged 50.8, compared with 51.2 in the same period last year, and indicating even weaker job growth in the UAE’s non-oil private sector this year relative to 2017. Backlogs of work increased sharply again as a result of the strong rise in new orders (and flat employment), although the rate of increase in backlogs was softer than in June.        

While input cost inflation remained relatively modest in July compared with earlier this year, firms continued to lower average selling prices, with output prices declining for the third month in a row. The continued squeeze on firms’ margins is likely a key factor in the soft employment survey, as firms remain under pressure to contain costs and boost efficiency.

Purchasing activity accelerated slightly in July but the actual stock of pre-production inventories was unchanged from June, which suggests that firms may be becoming more efficient in their inventory management. Overall, businesses remain very optimistic about the coming year, with more than 60% of respondents expecting their output to be higher in year’s time. However, this is lower than the May and June surveys.

The main findings of the July survey were as follows:

  • Headline PMI cools to 55.8 in July, from 57.1 in June...
  • ...although the pace of expansion remains solid in the context of historical data
  • New export orders hit three-year high

The headline seasonally adjusted 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 – fell to 55.8 in July, from 57.1 in June and the lowest reading in three months. The figure remained well above the neutral 50.0 mark, however, signalling a sharp improvement in business conditions across the non-oil private sector in July. The latest expansion was broadly in line with the average seen in the year-to-date.

Although output growth eased to a three-month low in July’s survey, the pace of expansion was sharp overall and well above the series’ historical average. Businesses in the non-oil private sector frequently noted that strong demand for goods and services led to higher output requirements.

New orders from abroad increased at the sharpest pace in three years during July. Many firms linked the improvement to a stronger demand climate in neighbouring GCC countries and Europe. In terms of overall new orders, growth eased to a four-month low, but remained solid in the context of historical data.

Reflecting robust inflows of new orders, backlogs of work increased at a steep pace during July. However, the rate of growth was slower than in June. Despite higher levels of work outstanding, firms hired additional staff at the slowest pace in over two years.

On the price front, the rate of input cost inflation remained muted and below the historical average. Purchase price inflation accelerated fractionally in July, whilst staff cost inflation softened to a 14 month low.

Promotional activity and intense competitive pressures across the UAE’s non-oil private sector led firms to reduce their selling prices for the third month running in July. The rate of decrease was moderate overall, although faster than that recorded in June.

Business confidence eased slightly from the survey-record high recorded in June. That said, the degree of optimism remained strong overall and the fourth-highest in the series’ six-year history.

-Ends-

The next UAE PMI Report will be published on September 4th 2018 at 08:15 (DUBAI) / 04:15 (UTC)

For further information, please contact:

Ibrahim Sowaidan

Senior Vice-President, Head - Group Corporate Affairs

Emirates NBD

Telephone: +971 4 609 4113 / +971 50 6538937

Email: ibrahims@emiratesnbd.com

Tricia Kaul                                                                           Khatija Haque

ASDA’A Burson-Marsteller; Dubai, UAE                                 Head of MENA Research, Emirates NBD

Tel: +971 56 6032673                                                            Email: KhatijaH@emiratesnbd.com

Email: tricia.kaul@bm.com

Joanna Vickers                                                                       Sam Teague

Corporate Communications                                                      Economist

IHS Markit                                                                                IHS Markit

Tel: +44-207-260-2234                                                             Tel: +44 1491 4610018

Email: joanna.vickers@ihsmarkit.com                                       Email: sam.teague@ihsmarkit.com

About

The Emirates NBD Saudi Arabia Purchasing Managers’ Index is based on data compiled from monthly replies to questionnaires sent to purchasing executives in over 400 private sector companies, which have been carefully selected to accurately represent the true structure of the Saudi 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. IHS 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 2018, total assets were AED 477.5 Billion, (equivalent to approx. USD 130 Billion). The Group has a significant retail banking franchise in the UAE and is a key participant in the global digital banking industry, with over 90 per cent of all financial transactions and requests conducted outside of its branches. The bank was declared the Most Innovative Financial Services Organization of the Year at the 2017 BAI Global Innovation Awards.

The bank currently has 227 branches and 1065 ATMs and SDMs in the UAE and overseas and a large social media following, being the only bank in the Middle East ranked among the top 20 in the ‘Power 100 Social Media Rankings’, compiled by The Financial Brand. 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, the Kingdom of Saudi Arabia, Egypt, India, Singapore, the United Kingdom and representative offices in China and Indonesia.

The Group is an active participant and supporter of the UAE’s main development and community initiatives, in close alignment with the UAE government’s strategies, including financial literacy and advocacy for inclusion of People with Disabilities under its #TogetherLimitless platform. Emirates NBD Group is an Official Premier Partner of Expo 2020 Dubai. For more information, please visit: www.emiratesnbd.com: www.emiratesnbd.com

About IHS Markit (www.ihsmarkit.com)

IHS Markit (Nasdaq: INFO) is a world leader in critical information, analytics and solutions for the major industries and markets that drive economies worldwide. The company delivers next-generation information, analytics and solutions to customers in business, finance and government, improving their operational efficiency and providing deep insights that lead to well-informed, confident decisions. IHS Markit has more than 50,000 business and government customers, including 80 percent of the Fortune Global 500 and the world’s leading financial institutions. 

IHS Markit is a registered trademark of IHS Markit Ltd and/or its affiliates. All other company and product names may be trademarks of their respective owners © 2018 IHS Markit Ltd. All rights reserved.

The intellectual property rights to the Emirates NBD Saudi Arabia PMI® provided herein are owned by or licensed to IHS Markit. Any unauthorised use, including but not limited to copying, distributing, transmitting or otherwise of any data appearing is not permitted without IHS Markit’s prior consent. IHS 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 IHS 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. IHS Markit is a registered trade mark of IHS Markit Limited and/or its affiliates.

 

© Press Release 2018

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