Dubai – Mubasher: The UAE’s non-oil sector recorded a growth uptick in October on the back of strong expansions in output and new orders, contributing to a positive start for the fourth and final quarter of 2017.
“Stocks of purchases rose at a record pace in October, linked to expected demand,” the Emirates NBD purchasing managers’ index (PMI) report released Sunday indicated.
The headline seasonally adjusted Emirates NBD PMI logged a rise in the UAE’s non-oil economy to 55.9 in October, up from 55.1 in September.
“Remaining well above the critical 50.0 no-change mark, the latest reading signalled a sharp improvement in the health of the non-oil private sector. Furthermore, the rate of expansion was above the historical series average (54.6),” the report said.
In terms of prices, output prices retreated “at the fastest rate since March 2010”, whereas cost burdens grew last month, the report produced by IHS Markit and sponsored by Emirates NBD added.
In October, new business received by UAE non-oil private sector firms surged, whereas the growth rate was “little-changed” month-on-month, but remained above the long-run series average.
“Demand for Emirati-produced goods and services from abroad returned to growth in the latest survey, albeit at a muted rate overall,” the report indicated.
“The increase in the UAE’s headline index in October reflects faster output growth and a sharp increase in inventories, as firms anticipate stronger demand in the coming weeks,” commented head of MENA research at Emirates NBD Khatija Haque.
The top official highlighted that despite that, the survey showed that “firms continued to discount selling prices in order to support demand, and the employment growth remains modest.”
Meanwhile, input price inflation continued in October, registering a five-month overall rise in cost burdens. Still inflation was “subdued despite ticking up in the latest survey”, which, based on October’s data, suggests that the rise in input prices was “primarily fuelled by rising raw material costs.”
Despite the rise in costs and subsequent pressures, UAE companies reduced their charges and fees for second month in a row as intense competition continued.
“Non-oil private sector companies in the UAE built-up input stockpiles at a record pace during October…The rise in stocks of purchases correlated with business confidence, which hit a five-month high in October,” according to the report.
In terms of employment in the UAE’s non-oil private sector, the latter continued in October, marking an extension in job creation for a one-a-half-year-period. “Emirati respondents commonly linked hiring activity to the increase in output requirements,” Emirates NBD added in its report.
Vendor performance marked an eight-year record performance, with almost 25% of panellists citing an improvement in delivery times.
“Panellists frequently linked strong underlying demand to the rise in output requirements,” the survey indicated.
