UAE: PMI moderates in January
The IHS Markit Purchasing Managers’ Index (PMI) fell to 54.1 in January from December’s 55.6. Consequently, the index remained above the 50-threshold, but pointed to a moderating improvement in business conditions from the previous month.
The weaker reading came as output and new orders growth fell to four-month lows. Although the Expo 2020 continues to stimulate activity, business was likely restrained by the uncertainty generated by the emergence of the Omicron variant and a tailing-off of the recent rebound in tourism. Moreover, growth in employment and stock levels was hit by rising inflation, which ticked up to the highest level since March. That said, delivery times shortened considerably, pointing towards an easing of supply bottlenecks. Also on a positive note, businesses’ output expectations improved, likely in part due to easing concerns regarding Omicron’s impact on the global economic recovery despite its negative initial effects on consumer and business confidence.
On the reading, IHS Markit’s David Owen commented:
“The [non-oil] sector could quickly recoup […] momentum in the coming months as the Omicron wave appears shorter than previous ones, although firms face additional challenges from stronger inflationary pressures, global supply chain problems and a possible dip in activity once the Expo ends.”