Busi­ness ac­tiv­ity will con­tinue to in­crease in the UAE: Sur­vey

The Gulf Today - Business - - UAE -

DUBAI: Com­pa­nies in the UAE re­mained op­ti­mistic that busi­ness ac­tiv­ity will con­tinue to in­crease over the course of 2019, ac­cord­ing to the re­lease of De­cem­ber data from the Emi­rates NBD Pur­chas­ing Man­agers’ In­dex (PMI) for the UAE.

The sur­vey, com­piled by IHS Markit, con­tains orig­i­nal data col­lected from a monthly sur­vey of busi­ness con­di­tions in the UAE non-oil pri­vate sec­tor.

Com­ment­ing on the UAE PMI sur­vey, Daniel Richards, Mena Econ­o­mist at Emi­rates NBD, said: Firms in the UAE’S non-oil pri­vate sec­tor con­tin­ued to ex­pand their pur­chas­ing ac­tiv­ity in re­sponse to growth of new orders and higher out­put re­quire­ments. Data suggested that pur­chased items were only used to sup­port higher out­put, rather than also to build stock hold­ings.

In­ven­to­ries of in­puts de­creased for the first time in four months, with some firms link­ing this to ef­forts to man­age cash low more ef­fi­ciently.

Com­pa­nies re­mained op­ti­mistic that busi­ness ac­tiv­ity will con­tinue to in­crease over the course of 2019.

Op­ti­mism was based on ex­pec­ta­tions of im­prov­ing eco­nomic con­di­tions and suc­cess in se­cur­ing ad­di­tional sales over the next 12 months.

Firms cited ex­pec­ta­tions of suc­cess­ful sales drives to help boost out­put, sug­gest­ing that price dis­count­ing will re­main nec­es­sary to boost out­put in 2019.

The lat­est ex­pan­sion of busi­ness ac­tiv­ity was solid over­all as new orders in­creased again. The of­fer­ing of dis­counts in a com­pet­i­tive mar­ket­place re­port­edly con­trib­uted to rises in both ac­tiv­ity and new busi­ness.

“The Emi­rates NBD Pur­chas­ing Man­agers’ In­dex (PMI) for the UAE is at 54.0 in De­cem­ber. This marked the slow pace of ex­pan­sion in the non-oil pri­vate sec­tor since Oc­to­ber 2016, and has weighed on the 2018 av­er­age, which inished the year at 55.5, from 56.1 in 2017. Out­put was at 58.8 and new orders at 58.3. Al­though the PMI re­mains in ex­pan­sion­ary ter­ri­tory (50.0 is the neu­tral level which de­lin­eates con­trac­tion and ex­pan­sion), the sub­com­po­nents of the sur­vey sug­gest that this is con­tin­u­ing to come at a cost to busi­nesses’ mar­gins, al­beit to a lesser de­gree than seen in Novem­ber.


Out­put prices did not fall as quickly in De­cem­ber as in the pre­vi­ous month — which was the fastest pace recorded since the 2009 re­ces­sion — but they re­mained sub-50. Do­mes­tic com­pe­ti­tion led to sales pro­mo­tions, ac­cord­ing to irms sur­veyed, and a slower pace of growth in new ex­port orders sug­gests that most of the growth in new orders was do­mes­ti­cally driven.

The fall in out­put prices was mit­i­gated some­what by a slower pace of growth in pur­chase costs, which ex­panded at the slow­est pace since Au­gust.

Nev­er­the­less, the squeeze on mar­gins is ap­par­ently still tak­ing its toll on head count and pay; both em­ploy­ment and staff costs were broadly lat com­pared to a month ear­lier. Only 1.4 per cent of irms took on new staff while all re­spon­dents re­ported their stafing costs un­changed, main­tain­ing a trend recorded through­out H2 2018.

De­spite the squeeze on irms and dip in the head­line read­ing, a size­able ma­jor­ity of re­spon­dents (65.4 per cent) re­tain the view that out­put will be higher in 12 months’ time.

The head­line ig­ure relected smaller con­tri­bu­tions from all ive con­stituent in­dices, sug­gest­ing a broad slow­ing of growth across the non-oil pri­vate sec­tor at the end of 2018.

Sell­ing prices were re­duced for the third suc­ces­sive month, al­beit mod­estly.

Com­pa­nies were helped in the of­fer­ing of dis­counts to cus­tomers by rel­a­tively weak in­put cost in­fla­tion. Over­all in­put prices rose only marginally in De­cem­ber, with both pur­chase and staff costs broadly fol­low­ing the over­all trend.

Newspapers in English

Newspapers from UAE

© PressReader. All rights reserved.