United Arab Emirates’ non-oil sector expands

The United Arab Emirates’ non-oil private sector expanded at its fastest pace in two years in July as demand rebounded from the COVID-19 pandemic, a business survey showed.

The seasonally adjusted IHS Markit UAE Purchasing Managers’ Index (PMI), which covers manufacturing and services, rose to 54.0 from 52.2 in June, its highest reading since July 2019.

New orders increased sharply, leading to a spike in output to 57.1 in July from 53.6 in June.

Firms continued to hire with the employment sub-index hitting its highest level since January 2019, though the month-on-month increase was marginal, to 50.7 from 50.6 in June.

“UAE’s non-oil sector enjoyed a busy start to the third quarter of the year, as firms saw the sharpest rise in new orders for two years amid soaring domestic sales and strengthening market confidence”, said David Owen, economist at IHS Markit.

Input costs for businesses rose in July on the back of delays to shipments from Asia.

“With COVID-19 cases re-accelerating in Asia, firms also pointed to a worsening of supply chain problems. In fact, delivery times lengthened to the greatest extent since the onset of the pandemic in April 2020,” Owen said.

Coronavirus-related measures in other parts of the world led to a third successive fall in export sales in July, though the decline was less marked than in June.

Surveyed firms continued to expect growth going forward, with the easing of COVID-19 restrictions and the Dubai Expo 2020 later this year contributing to improved economic conditions.

Still, overall business expectations declined month-on-month in July for the first time in eight months, the survey showed.