UAE - Mubasher: The UAE’s seasonally adjusted Purchasing Managers' Index (PMI) reflected a solid improvement in the non-oil sector’s performance midway through the second quarter (Q2) of 2023.

The PMI retreated to 55.5 in May 2023 from 56.6 last April, according to the latest S&P Global PMI data. However, the index remained above the 50 no-change mark and its long-run average of 54.2.

The progress in operating conditions was mainly driven by a sharp uplift in sales volumes during May, with the business intakes increasing at a slower pace compared with April's 17-month high. 

Firms continued to report a marked surge in both activity and new orders. The upturn highlighted strong demand conditions in the domestic economy, as well as a sharp improvement in supply chains which kept cost pressures subdued.

Accordingly, companies showed a greater degree of confidence in future activity, with the 12-month outlook jumping to its highest level since October 2021. 

David Owen, Senior Economist at S&P Global Market Intelligence, elaborated that the powerful improvement in business conditions was backed by marked upturns in activity and new work.

"Moreover, rising new work intakes and strengthening demand conditions gave firms greater confidence for the year ahead,” Owen underscored.

He added:  “The Future Output Index showed optimism rising to the highest level since October 2021, with firms pinning their hopes on projections that the strong run of demand momentum will continue.”

“Also supporting this confidence was further promising data on business costs, which signalled that price pressures remained subdued in May,” the economist noted.

“Firms additionally saw a sharp improvement in supply chain performance, as lead times on inputs shortened the most since September 2019,” he stated. “Hiring activity was meanwhile robust, as job levels increased at the second-fastest pace since July 2016, reflecting a strong intent at companies to build capacity in the hope of sustained growth."