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UAE’s PMI declines in February signaling modest growth: IHS Markit

UAE’s PMI declines in February signaling modest growth: IHS Markit
The rate of output growth slowed on a monthly basis

Mubasher: The headline seasonally adjusted UAE Purchasing Managers' Index (PMI) declined last month, indicating a slower and marginal improvement in business conditions, according to a report by IHS Markit published on Wednesday.

The index, which measures the conditions in the Emirati non-oil private sector economy, declined to 50.6 in February from 51.2 in January.

It is worth noting that any reading for the index above 50 indicates expansion, which means that it continued to signal a rise in business activity in the UAE’s non-oil economy.

The rate of output growth slowed from the previous month and was modest, as a number of firms commented on weaker demand trends due to stricter COVID-19 restrictions on areas such as retail and services, IHS Markit said in its report, noting that on the positive side, the impact on cost pressures was limited as input prices rose slightly. Meanwhile, some firms continued to offer discounts in an effort to increase client demand, leading to a further fall in average selling charges.

The tightening of COVID-19 restrictions in February had a notable impact on the UAE economy, according to PMI survey data. New orders failed to grow for the first time since last October, while output growth softened since the start of the year. Reports of weaker demand were largely led by those sectors that saw the harshest restrictions, although some firms on the production side were also hard-hit by customs delays and global shipping problems,” David Owen, Economist at IHS Markit, said.

The return to stricter lockdown measures meant that many firms' expectations for future output growth remained subdued in February, despite the success of the UAE's vaccine programme paving the way for a reopening of the economy later in the year,” he added.