UAE: Business conditions continue to deteriorate in February as PMI drops to an all-time low
The IHS Markit Purchasing Managers’ Index (PMI) inched down to 49.1 in February from 49.3 in January, marking the lowest reading since records began in August 2009. As such, the index remained below the 50-threshold, indicating a deterioration in business conditions from the previous month in the non-oil private sector.
The headline reading was pushed lower by declining output, new orders and employment. Production, notably, contracted for the first time in over ten years reflecting deteriorating consumer demand. Meanwhile, new orders fell for the second month running in February, with the rate of decline sharpening from the previous month and thus pointing to a weakening domestic economy. On the price front, output prices decreased but at the slowest rate in 17 months, while input cost inflation slowed due to generally lower oil prices.
Regarding firms’ outlook given the gloomy results, David Owens, an economist as IHS Markit, commented:
“While many firms remained upbeat for the year ahead, business expectations were hit by fears that the [coronavirus] outbreak could damage an already struggling domestic economy. As a result, confidence for future output fell to a near two-year low.”