Today's Edition
A.SREENIVASA REDDY (ABU DHABI)
The non-oil private sector of the UAE’s economy continued its expansion in March with the seasonally adjusted S&P Global UAE Purchasing Managers’ Index (PMI) remaining at 54.0, way above the 50.0 mark. In February, PMI was recorded at 55.0.
PMI is an economic indicator that measures the business activity in the manufacturing and services sectors. It is based on surveys of company executives and reflects trends in new orders, production, employment, supplier deliveries, and inventory levels. A PMI above 50 indicates expansion, while below 50 signals contraction.
The latest PMI survey data reaffirms positive growth in the UAE’s non-oil economy in March. “Businesses reported a considerable increase in their purchasing activity during March, often as part of efforts to address the ongoing backlog of outstanding work.” the S&P Global PMI report said.
The uplift in operating conditions was driven by an increase in sales volumes across the non-oil economy. “Monitored companies frequently noted gaining new customers amid improving demand conditions,” the S&P Global survey said.
Non-oil private sector business activity rose sharply in March, though at the slowest pace for four months. “Exactly 27% of surveyed firms saw activity increase, while 8% reported a decline,” the report noted.
The UAE businesses continued to highlight a steep rise in backlogs of work, though the slower rate of demand growth somewhat curbed capacity, the report said.
The UAE PMI signalled another month of robust growth in the non-oil economy in March, David Owen, Senior Economist at S&P Global Market Intelligence, said.
“The quest to overcome capacity hurdles ramped up in March, as firms purchased inputs in bulk to try and clear their backlogs,” Owen said.
The surge in purchasing activity reached its fastest pace since mid-2019, while a decrease in inventories indicated that these new inputs were quickly integrated into operations. “However, some companies are still grappling with backlogs due to widespread delays in customer payments, something which the UAE’s move towards a mandatory e-invoicing system is aiming to resolve,” the Senior Economist said.
Purchases of inputs rose at the sharpest rate in nearly six years. “Firms continued to channel resources into procurement activity in a bid to mitigate the pile-up of backlogs,” the report said. A concurrent dip in total inventories provided further evidence that output requirements were elevated, the report noted.
“In contrast to purchases, employment growth was subdued in March, softening to its weakest in nearly three years,” the survey noted.
Average input prices increased at a moderate pace at the end of the quarter. Some survey panellists noted a rise in material costs due to stronger input demand, while others reported a fall in transport prices. Salary costs continued to climb due to cost-of-living pressures, the report noted.
Prices charged by non-oil firms rose for the third consecutive month in March. Survey comments indicated that firms were seeking to protect their margins and respond to higher market prices.
Dubai PMI
Dubai non-oil business conditions improved at a softer rate for the third month in a row in March.
The headline PMI was recorded at 53.2 in March, down from 54.3 in February, and below the overall UAE reading of 54.0.
“New orders increased sharply, but the rate of expansion was much softer than at the start of the year,” the report noted.
