UAE: PMI ticks up in May amid emerging signs of recovery

UAE PMI May 2020

UAE: PMI ticks up in May amid emerging signs of recovery

The IHS Markit Purchasing Managers’ Index (PMI) edged higher to 46.7 in May from 44.1 in April. As such, the index remained below the 50-threshold, marking the fifth consecutive month of deteriorating business in the non-oil private sector.

The headline reading indicated a softening rate of deterioration in May from the month prior, mostly thanks to a milder contraction in output as increased freedom of movement supported activity somewhat. However, export orders continued to decline sharply on slack demand, while employment levels also dropped in the month. On the price front, input prices increased for the first time in three months on higher raw material costs, while output prices fell for the 20th straight month.

Looking ahead, firms outlook for the coming year worsened in May, hitting the joint-lowest level since the series began in 2012. Firms highlighted concerns around both output and orders, while becoming increasingly pessimistic regarding the pandemic’s long-term impact on demand.

Commenting on the reading, David Owen, an economist at IHS Markit, noted:

“Lockdown measures worldwide have notably reduced exports, as well as limiting input supply. However, May data suggested that these impacts are lessening as some countries move to lighter measures. Export sales in the UAE fell again, but at a softer rate, while deliveries were helped by the lifting of travel restrictions.”

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