The growth momentum of the UAE’s non-oil private sector economy eased at the end of the first quarter, the most muted expansion seen since May of 2017, according to new data from Emirates NBD.
In its monthly PMI [purchasing managers’ index] survey which surveys business conditions in the country, Emirates NBD found that the easing of new orders, output and employment improvements, coupled with stagnant foreign demand for goods and services, contributed to a softer growth in March.
That expansion, however, was still about the historical average.
According to the data, output growth softened to a 23-month late, albeit with a rate of expansion that remained marked overall. Some clients surveyed by Emirates NBD linked the rise to new project wins.
Additionally, incoming new business continued to grow sharply, posting above the long-run average in March. The rate of expansion, however, was a four-month low.
While growth of domestic new business remained strong, orders from abroad were found to have decreased in the latest survey, ending a three-month sequence of growth. Anecdotal evidence suggests that firms experienced competitive pressures in foreign markets.
The rate of employment growth was also found to have eased, slipping to a 17-month low in the latest survey.
With regards to inflation, Emirates NBD found that price pressures eased further after a peak at the beginning of the year. The rate of input cost inflation was marginal overall, and the weakest recorded since May of the previous year.
As price pressures eased, for the second month in a row many businesses offered price discounts in a bit to stimulate client demand. The rate of output charge deflation was found to be “modest”, overall.
Confidence in the non-oil private sector improved since February, with new project wins and a global economic upturn encouraging positive sentiment in March.
“Although the UAE’s PMI score continues to moderate from the pre-VAT boost enjoyed at the end of 2017, it remains firmly in expansionary territory and the continued discounting by firms should help stimulate demand,” said Daniel Richards, MENA economist at Emirates NBD. “Firms are more positive towards future output than they were last month, reflecting new orders that remain strong.”
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