RIYADH: The non-oil sector in the UAE experienced its second-best growth in four-and-a-half years, as the Emirate’s Purchasing Managers’ Index reached 57.4 in December 2023, as per an economic tracker.
The latest S&P Global PMI report attributes the December growth to a surge in new orders, supporting robust output.
In November, the UAE’s PMI was 57, while in October and September, it stood at 57.7 and 56.1, respectively.
Any PMI reading above 50 indicates growth in the non-oil sector, while readings below 50 signal contraction, according to S&P Global.
“The UAE non-oil economy closed the year with another impressive expansion, confirming the strongest quarterly upturn since the second quarter of 2019 and putting the sector in a favorable position for 2024,” said David Owen, senior economist at S&P Global Market Intelligence.
He added: “Not only did businesses enjoy another substantial increase in output, but sentiment data suggested that they expect this growth to continue, with year-ahead expectations among the highest seen since prior to the COVID-19 pandemic.”
According to the report, companies operating in the non-oil private sector recorded a moderation of inventory growth in the final month of the year, reflecting efforts among some businesses to optimize input holdings and costs.
S&P Global further pointed out that firms also expanded their staffing levels to keep up with the uptick in business, with the pace of job creation equalling the series long-run trend.
“With wage pressures also remaining mild, firms were often willing to offer promotions and run down prices to remain competitive,” said Owen.
He added: “While the drop in charges — the quickest since July — may support additional sales growth in early 2024, the findings suggest that firms are still keeping profit margins low as markets become more crowded.”
The PMI survey revealed that business optimism for output activity strengthened in December from the previous month driven by new sales pipelines and enquiries, as well as improving market conditions.
Egypt’s PMI rises marginally to 48.5
Meanwhile, S&P Global, in another report said that the PMI of Egypt improved marginally to 48.5 in December, compared to 48.4 in November.
However, the PMI figures which remained below the threshold 50 mark indicate the contraction of the growth in the nation’s private sector.
“The Egypt non-oil economy rounded off the year with the fastest drop in sales for seven months over December, suggesting that the drag on demand conditions from inflation has not lost any power,” said Owen.
The latest survey data also indicated a worsening slump in new order volumes in December, which respondents often linked to currency problems and rapid inflation.
Similarly, non-oil companies cut their output levels further in December, and the rate of contraction quickened slightly from the previous month.
“Given the nature of the current inflation wave, relief on this conundrum is only likely to come from an easing of external political and financial headwinds,” added Owen.
On a positive note, non-oil firms in Egypt raised their staffing numbers for the first time in three months in December, and future output expectations staged a modest recovery from November’s record low.
