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New orders prop up UAE non-oil private sector growth in June

New orders prop up UAE non-oil private sector growth in June
The non-oil private firms have seen a sharp expansion in business activity in June

UAE – Mubasher: Business conditions of the non-oil private sector in the UAE have signalled an improvement in June, backed by solid expansion in new orders, a recent survey sponsored by Emirates NBD and produced by IHS Markit revealed.

The headline seasonally adjusted Emirates NBD UAE Purchasing Managers’ Index (PMI) fell to 57.7 in June from 59.4 in May, but still marking monthly improvement in business conditions.

Khatija Haque, head of MENA Research at Emirates NBD, said: “The recent PMI surveys indicate that growth in the UAE’s private sector has accelerated in Q2-19. Indeed the average PMI reading for the second quarter was the highest since Q4-14.” 

“While firms have reported growth in output and new orders, this has come on the back of further price discounting.  As a result, there has been no real boost to hiring as businesses remain focused on keeping costs down,” Haque added.

The non-oil private firms have seen a sharp expansion in business activity in June, encouraged by marketing activities, although it was slightly weaker than in May, the survey said.

Economic conditions have also improved last month as new orders grew despite contracting from May, it added.

Output prices slipped for the ninth month in a row as competitive pricing allowed panellists to secure sales.

On the other hand, input prices edged up in June and purchase costs rose marginally, while wages and salaries almost remained unchanged.

“Companies were able to offer discounts thanks to a lack of cost inflationary pressure,” according to the survey.

Backlogs of work grew last June with most respondents reporting delays in receiving payments from customers and almost no change in employment.

“Purchasing activity grew at a record pace for the second month running as companies responded to rising new orders. Stocks of purchases also increased, albeit at a reduced pace that was the softest since February,” the survey added.

Non-oil firms remained optimistic that business activity would improve over the coming year on the back of expected growth in new orders and Expo 2020 Dubai, even sentiment softened again from April’s record high.