Dubai – Mubasher: The UAE’s non-oil private sector saw improvements in business conditions in July on the back of major expansions in terms of output and new work, while prices remained stable due to strong competition, a new report by IHS Markit and Emirates NBD showed.

As for output, companies increased both their inventories and employment, while price-wise, competition was “intense” due to “stronger input cost inflation” which prevented companies from transferring any price increases to consumers, the report on the Purchasing Managers' Index (PMI) indicated.

“On the downside, new export orders fell at the quickest pace in the history of the survey,” the report highlighted.

“The PMI survey in July showed that domestic demand remained robust, offsetting weakness in external demand last month. Firms were more optimistic about the coming year, and increased inventories at a record rate, partly in anticipation of further order growth,” commented Khatija Haque, head of MENA Research at Emirates NBD.

Meanwhile, the headline seasonally adjusted Emirates NBD UAE PMI recorded a three-month high of 56.0 in July compared to 55.8 the month before, indicating a “sharp improvement in operating conditions” in the country’s non-oil private sector.

“The overall upturn in the sector was underpinned by a sharper increase in output. A combination of more projects and favourable economic conditions was reported by panellists as having contributed to greater business activity,” the report said.

Meanwhile, orders registered a strong increase last month, although growth had “eased slightly” from June, Emirates NBD said, noting that “anecdotal evidence” highlighted that promotional activities were the main reason behind higher demand from clients.

Although new orders saw a rise, new export work declined for the second month in a row in July.

The survey added that the “ongoing upturn in output encouraged companies to engage in input buying. As a result, inventories held by firms operating in the UAE rose at a record pace.”

While companies increased their payroll numbers, the rise in employment was marginal, the report added.