UAE - Mubasher: The UAE non-oil private sector economy has contracted in August for the first time in three months amid record job cuts which put pressure on the sector's recovery from the coronavirus (COVID-19) pandemic, according to adjusted IHS Markit UAE Purchasing Managers' Index (PMI).
The PMI declined below the 50.0 mark separating growth from contraction in August, according to a press release on Thursday.
The PMI's drop to 49.4 points in August from 50.8 in July reflects the deterioration in business conditions after growth in the UAE non-oil private sector economy for two months in a row.
However, the Output and New Orders sub-indices showed that the commercial activity and demand continued to expand during August.
Companies recorded a solid upturn in new business inflows due to higher domestic spending, as export sales decreased for the second consecutive month.
Meanwhile, the production price recorded its lowest level since December 2019, as businesses are trying to recover sales lost during the COVID-19 lockdown.
The Economist at IHS Markit, David Owen, commented: "The PMI Employment Index fell to its lowest in over 11 years of data collection, signalling a sharp fall in workforces as firms shed excess capacity and clamped down on employee costs."
Owen added: "Activity was again projected to rise, but only tentatively, as business sentiment dropped to its lowest on record. As such, firms reduced selling charges sharply in order to remain competitive amid an uncertain future."
