United Arab Emirates: PMI rises in June following a weak showing in May
July 4, 2017
The Emirates NDB Purchasing Managers’ Index (PMI) picked up from 54.3 in May to 55.8 in June. The index thus moved further above the 50-point threshold that separates expansion from contraction in the non-oil producing private sector.
June’s figure was underpinned by faster increases in output and new orders, signaling an improvement in economic conditions. In response to buoyant economic activity, firms engaged in input buying, leading to a buildup in inventories. However, external demand softened, with new export orders falling for the first time in seven months, while employment stagnated despite strong private-sector growth. Input cost growth resumed in June, although in the face of fierce competition, firms continued to offer discounts, putting more pressure on margins.
According to Khatija Haque, Head of MENA Research at Emirates NBD, “The rise in output and new orders in June is encouraging, although we note that firms continued to reduce selling prices on average in order to support demand and order growth. The survey also highlights the lack of employment growth despite strong the strong increase in new work last month. Overall however, the PMI data for H1 2017 supports our view that the non-oil sectors have grown at a faster pace relative to H1 2016.”
Author: Oliver Reynolds, Economist