(MENAFN- Khaleej Times) Dubai Stronger demand and an expansion of new work have given a new growth momentum to the UAE's non-oil private sector in November to reverse the slowing trend seen in each of the prior three months, Emirates NBD said on Monday.
"A robust expansion of new work was a key factor behind improving business conditions. Stronger demand also contributed to faster job creation and a marked rise in purchasing activity," the bank said in a survey report.
"The November PMI data is encouraging as it continues to point to strong activity growth in the UAE, even as external demand remains soft. However, the environment remains competitive, and margins continue to be squeezed by rising input costs and declining output prices," said Khatija Haque, head of Mena Research at Emirates NBD.
The seasonally adjusted Emirates NBD UAE Purchasing Managers' Index rose for the first time in four months during November. At 54.2, up from October's six-month low of 53.3, the latest reading was above the 2016 average (53.8) and consistent with a robust improvement in business conditions.
UAE Minister of Economy Sultan bin Saeed Al Mansouri has said during a challenging 2016, the UAE economy has maintained its growth and high competitiveness. Strong government spending targeted at economic diversification and major infrastructure projects including those for World Expo 2020, as well as the expansion of airports, the Etihad rail, air and marine transport systems and road networks in the country are expected to boost the growth outlook further with gross domestic product (GDP) expected to accelerate to 3.4 per cent in 2017 from an estimated 3 per cent in 2016. Emirates NBD said output also increased sharply, albeit at a slightly weaker pace than in October. "On the price front, charges continued to fall in spite of higher purchasing costs." Some panellists indicated that they had offered discounts as part of sales initiatives.
In November, job growth accelerated to a four-month high, with a number of businesses requiring extra manpower in order to cater for new projects. However, the pace of hiring remained below the series average and only modest overall. Backlogs of work rose for the eleventh month in a row.
The survey, sponsored by Emirates NBD and produced by IHS Markit, contains original data collected from a monthly survey of business conditions in the UAE non-oil private sector.
The survey showed that growth of new business was central to the rise in the headline index. The rate of expansion picked up from the relatively subdued pace seen in the preceding two months, and was marked overall. Surveyed firms attributed higher new orders to successful marketing initiatives, including price discounting. Companies lowered their charges on average for the thirteenth straight month.
The report said the rise in total new work was hampered by another fall in new orders from abroad during November. The rate of decline eased to the weakest in the current five-month downturn, however, and was only modest overall. "With new orders and output requirements rising sharply, growth of purchasing activity quickened in November. The rate of pre-production inventory building picked up as a result. Some firms associated higher stocks with healthy demand projections."-
Issac John Associate Business Editor of Khaleej Times, is a well-connected Indian journalist and an economic and financial commentator. He has been in the UAE's mainstream journalism for 35 years, including 23 years with Khaleej Times. A post-graduate in English and graduate in economics, he has won over two dozen awards. Acclaimed for his authentic and insightful analysis of global and regional businesses and economic trends, he is respected for his astute understanding of the local business scene.
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