UAE non-oil private sector activity slows in July to lowest level in three months

UAE’s non-oil sector activity slowed in July to a three-month low, while growth in Saudi Arabia cooled off amid project delays, according to new separate surveys of companies in both countries released yesterday.

Emirates NBD’s Purchasing Managers’ Index for the UAE fell to 55.8 points in July compared to 57.1 points in June leading to a weak job market and lower selling prices, the survey showed. A reading above the 50-mark indicates growth and below 50 signals contraction. The index is a composite indicator designed to give an overview of operating conditions in the non-oil private sector economy. The survey is sponsored by Dubai’s biggest lender, Emirates NBD, and produced by IHS Market, a financial information services company

“Both output and new work, while still strong, were softer than in June,” Khatija Haque, head of Mena research at Emirates NBD, said. “The continued squeeze on firms’ margins is likely a factor in the soft employment survey, as firms remain under pressure to contain costs and boost efficiency.”

The UAE’s economy, which slowed down last year on the back of lower oil prices, was off to a slow start in the first quarter, growing 1.21 per cent compared with 3.01 recorded in a year-earlier period, according to figures from the Central Bank of the UAE.

The bank, though, has raised its economic growth forecast for this year to 2.7 per cent from its previous projection of 2.5 per cent in anticipation of expansion in the non-oil sector despite the soft first quarter.

Output growth in the UAE declined to 61.9, a three-month low in July but the rate of expansion was “sharp overall” and above the survey’s historical average, the survey said.

Meanwhile, the Emirates NBD Purchasing Managers’ Index for Saudi Arabia eased to 54.9 in July down from 55 in June, according to a separate survey.

“Although the index has re-

bounded over the last couple of months, year-to-date the headline PMI averaged 53.4, well below the 56 average for the same period last year, which indicates a much slower rate of growth in the kingdom’s nonoil private sector so far this year,” said Ms Haque.

Despite a continuation of robust business conditions, backlogs increased due to delays in ongoing projects, with job creation in the non-oil private sector remaining historically subdued, the survey noted.

Business confidence in the non-oil sector also remained subdued for July compared with the performance so far this year. The survey noted that new marketing initiatives and product launches may reverse the lull as expected economic upturn continued to underpin positive investor sentiment.