Dubai: The UAE’s July purchasing managers’ index (PMI) rose to 55.8, compared to 54.7 posted in June.
July data suggests that the UAE’s non-oil private sector regained some of the growth momentum that was lost at the end of the second quarter.
Output and new orders both rose at sharper rates, contributing to overall improvement in business conditions.
The UAE PMI is based on data compiled from monthly replies to questionnaires sent to purchasing executives in approximately 400 private sector companies. 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.
“The latest survey is encouraging, and highlights resilience within the UAE economy in the face of a challenging regional and global macro backdrop. The 1.1pp improvement in the headline reading relative to June was the strongest monthly gain in the PMI in nine months,” said Jean-Paul Pigat, Senior Economist at Emirates NBD
The PMI growth at the start of the third quarter is broadly in line with the average seen over the second quarter (56), but remained weaker than the trend recorded so far this year (56.8). The overall acceleration was mainly driven by faster expansions in output and new business during July. The respective rates of growth were marked overall, having quickened from the recent lows seen in June.
“The rebounds in output and new orders were particularly encouraging, and we expect this momentum to continue through the remainder of 2015,” said Pigat.
External demand
Solid improvements were seen within both the output and new orders sub-components, which rose to 60 and 60.2 respectively. New export orders in particular registered a healthy increase, jumping to 58.1 in July from 55.1 the previous month and marking the 62nd consecutive month of rising external demand.
Job creation was also sustained at a solid pace. Non-oil private sector employment in the UAE continued to increase in July, marking a 43-month period of job creation. The rate of hiring was unchanged from June’s solid pace, and remained in line with the average noted over six years of data collection.
The start-up of new projects was also cited as a factor behind the increase in the backlogs of work and employment indices. The initiation of new projects is an encouraging sign, and suggests that the bounce in the headline PMI in July from June’s 22-month low is likely to have further to run.
On the price front, data highlighted divergent trends in July. The index data showed that the rate of cost inflation picked up to the quickest since February, while charges fell for the fifth time in the past six months. July also marked the 60th consecutive month that overall input prices rose at a faster pace than output prices.
Salary growth
The purchase price component jumped to its highest level since January (53.4), with panellists attributing the rise to higher prices of raw materials such as food, while staff costs also hit a five-month high (51.8), which means the non-oil private sector has registered three-and-a-half years of uninterrupted salary growth. In contrast, the output price component fell below the neutral 50 level (49.5) for the fifth time in the past six months, as some firms offered discounts in a bid to secure new clients amid greater competition.
