UAE: PMI shows softening non-oil growth amid supply chain challenges

UAE PMI March 2024

UAE: PMI shows softening non-oil growth amid supply chain challenges

The S&P Global Non-oil Purchasing Managers’ Index (PMI) fell to 56.9 in March from 57.1 in February. As a result, the index remained above the 50.0 no-change threshold, but signaled a softer improvement in non-oil private sector operating conditions compared to the previous month.

The latest PMI reading was primarily driven by a sharp increase in new order inflows, which led to a sustained rise in output levels. That said, despite this positive demand, companies faced significant challenges, including administrative delays and increased supply constraints due to the Red Sea shipping crisis. These factors contributed to the joint-fastest accumulation of backlogs of work since records began nearly 15 years ago, indicating intense capacity pressures on UAE businesses.

On the financial side, businesses experienced a softer increase in their expenses, which, alongside increased competition, led to the strongest drop in output prices for three-and-a-half years. However, business optimism improved, reaching its highest level in six months. This optimism was supported by strong demand, high profits and effective marketing plans, encouraging firms to increase their employment numbers at a pace above the series trend for the second consecutive month.

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