DUBAI: Growth in the UAE non-oil sector dipped slightly last month as regional economies faced headwinds. The Emirates NBD-sponsored Purchasing Managers’ Index survey, produced by IHS Markit, showed slower growth for the UAE, posting at 56.1 last month compared to 56.2 in the first quarter. Above 50 shows expansion, while below indicates contraction. The non-oil private sector economy still faces hurdles as job creation remains modest, said Tim Fox, head of research and chief economist at Emirates NBD. “The PMI shows that while overall activity was firm going into the second quarter, companies are still facing significant challenges as job creation remains subdued and the pricing power is limited,” he said. Companies reported higher cost burdens as a result of a general increase in market prices for raw materials.
Saudi Arabia also experienced only a small increase in new jobs despite added pressure on operating capacity. “Below the surface it remains clear that companies are having to work harder to generate these gains with little capacity to increase employment and profit margins continuing to be squeezed,” Mr Fox said. The kingdom’s PMI increased to 56.5 last month, compared with 56.4 in March as business conditions improved following new construction and development activities. Input cost inflation climbed to an eight-month high but selling prices rose only fractionally amid competitive pressures, Emirates NBD said. In addition, Saudi Arabia survey respondents said there was a decrease in foreign demand and intense competition in external markets. Yet there may be good news on the horizon for Egypt with positive signs of the currency devaluation beginning to appear. While the country’s PMI was below 50, the rates of decline slowed.
The country’s goods and services market has been battling high prices and currency instability. But while non-oil private sector companies reduced payroll numbers, job losses eased to the weakest in 19 months. Mr Fox said: “Particular comfort can be taken from the fact that the new export orders index grew for the first time in nearly two years, which is likely to reflect the positive impact of a weaker exchange rate.” Export orders rose for the first time in nearly two years as a result of new export markets opening. “It reinforces the perception that after bottoming in the fourth quarter, the economic situation in Egypt is beginning to stabilise,” Mr Fox said, adding that this was the strongest overall reading in nine months.
