UAE businesses experienced a “marked increase” in business activity and a “steep rise” in new work in June, with most non-oil businesses optimistic about the future, according to the latest S&P Purchasing Managers Index (PMI).

“Companies are still enjoying strong customer demand and robust sales pipelines, which are sustaining output expectations and driving purchasing activity,” said David Owen, Senior Economist at S&P Global Market Intelligence.

“The recent surge in backlogs of work is also showing signs of easing, a trend that is likely to continue as the country recovers from April’s floods and supply chains adapt to the current situation in the Red Sea. Supplier lead times improved at the strongest rate for eight months, which will be a further boon for businesses.”

S&P’s PMI is compiled from survey results of purchasing executives and measures new orders, output, employment, suppliers’ delivery times, and stocks of purchases on a 0-100 scale, with 50 being the no-change mark. It is designed to provide an overview of operating conditions in the non-oil sector in the country.

In the latest update, the UAE non-oil specific index score declined slightly to 54.6 in June, down marginally from 55.3 in May, but remained solidly above the no-change mark, signalling resilience in the sector.

Despite slowed growth, competitive pressures, and rising input prices, over a quarter of companies saw an output rise, and demand for new work appeared to remain strong. Firms enjoyed the largest uptick in export volumes since October last year, and many reported the acquisition of new clients.

UAE non-oil companies were reportedly “fairly upbeat” in their future forecasts. Whilst there was a slight dip in optimism, the sentiments expressed were “among the best observed in the past four years,” according to S&P.

“With demand prospects looking strong, businesses increased their input buying volumes at a sharp pace, contributing to a faster expansion in inventory levels. Employment numbers were also raised in June, albeit at the slowest rate in five months,” the report read.

The Dubai-specific PMI index declined only marginally from 54.7 in May to 54.3 in June, indicating moderating market conditions. Moreover, new order growth remained strong whilst supplier performance improved sharply, job levels expanded, and confidence improved.

Aletihad News