https://arab.news/gcvjh
RIYADH: Slowdowns in new order growth and employment rates led the UAE’s Purchasing Managers’ Index to fall to 56.6 in January from 57.4 the previous month, a new survey showed.
The latest S&P Global PMI report disclosed that non-oil business activity in the country eased to a five-month low in January but remained above the 50 mark.
Any PMI reading above that number indicates growth in the non-oil sector, while readings below 50 signal contraction, according to S&P Global.
“While the UAE non-oil economy largely continued where it left off at the end of 2023, the PMI’s dip to 56.6 in January pointed to a slight moderation of growth from the sector’s best quarterly performance in four-and-a-half years,” said David Owen, a senior economist at S&P Global Market Intelligence.
He added: “Output and new order growth stayed above their long-run trends but softened, with the former easing to a five-month low.”
Owen went on to stress that employment growth was waning at its weakest point since December 2022, as strong demand and business optimism failed to translate into greater hiring.
“Meanwhile, the disruption to supply lines resulting from the Red Sea attacks appeared to have a modest impact on the UAE non-oil sector in January, with a few firms noting delivery delays, aggregate backlogs rising, and reports of higher shipping costs by survey respondents,” the economist underlined.
Owen continued to note that the impact on inflationary pressures so far has been notable but not severe, as input costs rose at a faster rate than in December but remained slower than in the preceding three months.
Moreover, the data indicated that an increase in transport costs underlined a faster rise in purchase prices than in December.
In addition to this, businesses also mentioned that greater material prices and salary adjustments pushed up expenses sturdily.
Despite this, average prices charged by non-oil firms decreased for the third month running, and to the greatest extent since May 2023.
Lower charges are often attributed to a build-up of competition and subsequent efforts to lure in new customers.
The survey further showed that confidence regarding year-ahead outlook for activity was positive and approximately on par with the 2023 average.
Companies are projecting strong demand and sales pipelines in the UAE to drive a sustained expansion in output.
The new projects and investments on the horizon are also expected to aid in bolstering positivity.