UAE: PMI remains in contractionary territory in November
The IHS Markit Purchasing Managers’ Index (PMI) was unchanged in November at October’s 49.5. Consequently, the index remained below the 50-threshold separating expansion from contraction, pointing to a continued albeit slight deterioration in business conditions in the non-oil private sector.
November’s reading largely reflected the first decline in output since May, as the recovery in activity stalled and demand remained subdued due to the global rise in new Covid-19 cases and renewed restrictions. Moreover, foreign new orders declined slightly in November due to European lockdowns. Meanwhile, employment levels continued to drop, albeit at the softest pace in nine months. On the price front, purchase prices fell for the first time in seven months, which supported lower output charges, although discounts were only modest. Lastly, firms remained pessimistic over the 12-month period outlook due to the domestic rise in new Covid-19 cases.
Commenting on the factors leading to November’s print, David Owen, economist at IHS Markit, noted:
“Notably, the latest data signaled a renewed decline in output across the non-oil economy in the UAE during November. The sector continued to suffer from weak demand which, despite a partial recovery, is reportedly still much softer than prior to the COVID-19 pandemic. […] Firms were hindered by a renewed fall in exports as global markets suffered from rising COVID-19 cases and lockdowns in some regions, including Europe. With the economy struggling to revive, job numbers once again declined.”