United Arab Emirates PMI October 2018

United Arab Emirates

United Arab Emirates: PMI ticks down in October but business confidence reaches record-high

November 5, 2018

The Emirates NBD Purchasing Managers’ Index (PMI) edged down to 55.0 in October, from 55.3 in September. The index landed steadily above the 50-point threshold that separates expansion from contraction in the non-oil producing private sector.

Output growth slowed to a six-month low in October but remained robust. Despite a marked slowdown in new export orders, overall order growth only ticked down marginally. However, this was in part due to further pressure on businesses’ margins, as input cost inflation picked up pace in the month while selling prices fell for the fifth time in the last six months. Though this dynamic likely supported demand, it also continued to weigh on the employment level, which was broadly flat in October after declining for the previous two months

Purchasing activity climbed in October, while stocks of purchases also ticked up marginally compared to September. Meanwhile, business optimism reached an all-time high as 78% of businesses expect higher output levels a year from now. Despite a stable PMI reading for the past few months, firms are increasingly confident about the future.

Commenting on October’s optimism, Khatiia Haque, head of MENA research at Emirates NBD, noted:

“The surge in oil prices, as well as announcements of increased government spending and Expo 2020 investment may have contributed to improved sentiment last month”.

FocusEconomics Consensus Forecast participants expect fixed investment to increase 4.5% in 2019, down 0.1 percentage points from last month’s forecast, and 3.3% in 2020. Panelists expect GDP to expand 3.2% in 2019, which is up 0.2 percentage points from last month’s forecast. For 2020, they see the economy expanding 3.3%.

Author:, Economist

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United Arab Emirates PMI Chart

UAE PMI October 2018

Note: Emirates NBD Purchasing Managers’ Index. Readings above 50 indicate an improvement in non-oil business conditions while readings below 50 indicate a deterioration.
Source: Emirates NBD and IHS Markit.

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