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”.
Author: Steven Burke, Economist