Strong rise in business confidence in UAE

6 May, 2019 12:00 AM printer

DUBAI: There was a sharp improvement in business conditions in the UAE last month, with the rate of new orders growth in the country's non-oil business surging to a 16-month high.

The headline seasonally adjusted Emirates NBD Purchasing Managers’ Index (PMI) for the UAE's non-oil private sector economy rose for the second month running in April, hitting 57.6 up from 55.7 in March, the biggest increase since December 2017, report agencies.

Higher new orders combined with a number of ongoing projects led to a substantial rise in business activity in April. The rate of expansion was the fastest since January 2015. Business confidence was also at the highest level since the survey began seven years ago, as expectations of a boost in new orders supported optimism. Around 82 per cent of those polled predicted a rise in output over the coming year, according to the survey. “The improvement in the volume of activity and new order growth last month is encouraging," said Khatija Haque, head of Mena Research at Emirates NBD, which sponsors the survey produced by IHS Markit. "However, with firms [are] still competing on price, there is still a reluctance to boost hiring and we haven’t seen a meaningful improvement in job growth.”

Emirates NBD report also pointed to improvements in the overall market conditions as external demand picked up on the back of new work from Saudi Arabia and Oman, pushing the growth in new export orders to near a four-year high.

However, the offers of discounts in a competitive market led to a seventh successive monthly fall in output prices .Both purchase prices and staff costs rose marginally in April, Emirates NBD said.

Purchasing activity continued to rise sharply, while stocks of purchases were at their highest since March 2018. Despite stronger demand for inputs, suppliers’ delivery times shortened as vendors responded well to requirements for faster deliveries.

Meanwhile, in Saudi Arabia, the headline seasonally adjusted Emirates NBD PMI for the non-oil private sector economy stayed at 56.8 for the second consecutive month in April, remaining at its highest level since the end of 2017. “Output and new order growth remained firm, but there has been no meaningful growth in private sector employment over the last three months, said Ms Haque. "Firms are also discounting prices more aggressively in a sign of an increasingly competitive environment.