United Arab Emirates: Business conditions deteriorate at record pace in April
May 5, 2020
The IHS Markit Purchasing Managers’ Index (PMI) dropped to a new record low of 44.1 in April from 45.2 in March. As such, the index sank further below the 50-threshold, marking the fourth consecutive deterioration in business conditions from the previous month in the non-oil private sector.
The headline reading was driven lower due to a continuation of lockdown measures impinging on business activity. New business fell sharply in April amid a slowdown in client activity, as movement restrictions impaired consumer demand. Likewise, output fell in April, while employment levels fell again and exports dropped at the fastest rate since records began in 2009. On the price front, input prices fell slightly, while output prices decreased for a 19th consecutive month.
Regarding the outlook, David Owen, an economist at IHS Markit, commented:
“Business sentiment reached the lowest in nearly three years, reflecting heightened uncertainty from the COVID-19 crisis. While firms on balance remain optimistic of growth in the coming year, some panellists were apprehensive, noting that the risk of an economic downturn was increasing."
Author: Stephen Vogado, Economist