Decypha: A survey, sponsored by Emirates NBD and produced by IHS Markit, has shown signs of dramatic improvement in business conditions in the UAE’s non-oil private sector in February, with a sharp and accelerated increase in inflows of new work underpinning a robust expansion of output. In addition, output prices have shown an increase in comparison to October 2015 figures.
The survey has attributed strong demand and favourable economic environment, which have encouraged companies to scale up activity and expand their headcount over the month. On the price front, average selling prices rose for the first time in almost one-and-a-half years as firms passed on to clients part of their additional cost burdens, according to a press release by Emirates NBD.
The report was based on primary data collected through a monthly survey of business conditions in the UAE non-oil private sector.
“The rise in the UAE PMI to the highest level since September 2015 suggests that demand has strengthened, both domestically and abroad. Higher oil prices have likely contributed to improved sentiment and business activity over the last few months,” Khatija Haque, Head of MENA Research at Emirates NBD, commenting on topic.
New business inflows rose sharply and at the fastest rate since September 2015, which survey participants linked to strong underlying demand and better economic conditions. With new export orders also expanding markedly over the month, companies raised output further. In fact, growth of business activity climbed to an 18-month peak.
Greater output requirements encouraged firms to purchase more inputs and hire extra staff. Buying levels increased to the greatest extent since last September, whereas the pace of job creation softened to the weakest in four months.
The upturn in purchasing activity helped companies to build their input stocks in February, which rose sharply and at the second-quickest pace in one-and-half years.
In tandem with softer increases in purchasing prices and staff costs, average input prices rose at a weaker rate during February. Nevertheless, businesses’ charges were raised for the first time since October 2015 as panellists reportedly acted to protect margins.
Amid reports of particular requests for faster deliveries, average lead times facing non-oil private sector firms in the UAE shortened during February. Furthermore, supplier performance improved to the greatest extent since October 2012.
UAE non-oil private sector companies expect the favourable economic scenario to be sustained over the coming 12 months, with one-in-five companies forecasting output growth in the year ahead. In fact, the level of positive sentiment was at a five-month high in February. Optimism reportedly reflected aggressive marketing campaigns, strong demand and new projects in the pipeline.
