Business activity in the UAE’s non-oil private sector economy continued to strengthen in November, driven by a marked improvement in demand as new orders inventories rose sharply.
The seasonally adjusted S&P Global purchasing managers’ index – a key gauge of the nation’s non-oil economy – hit 57 in November, slightly lower than the four-year high of 57.7 it reached in October.
A reading above the neutral level of 50 indicates growth while one below it points to a contraction.
The growth momentum across the private sector non-oil economy drove “a marked increase in purchasing activity” last month amid healthy demand conditions.
The upturn led to the biggest expansion in inventory levels for close to six years, placing some pressure on supply chains and material prices.
While cost inflation remained stronger than the recent survey trend, selling prices in November remained largely stable.
“The strong run of demand growth in the UAE non-oil economy sparked a rapid increase in input buying during November, as firms looked to ensure they were in a good position to take advantage of growth opportunities,” David Owen, senior economist at S&P Global Market Intelligence, said.
“Indeed, the uplift in buying … supported the most rapid build-up of stocks in close to six years, benefitting both local businesses and trade partners.”
New orders, among the main drivers of business activity in the Emirates, continued to grow last month on increased demand, new clients, project inquiries and marketing efforts.
Although the expansion in total sales was one of the fastest seen in nearly four-and-a-half years, it was softer than the level achieved in October, with some of businesses surveyed noting increased competitive pressures and a softer rise in new export orders.
Output levels in the Arab world’s second-largest economy also rose last month, expanding at the sharpest pace since June this year.
The UAE economy expanded by 3.7 per cent annually in the first half of the year, driven by strong non-oil sector growth as the country continues to pursue its diversification goals, Minister of Economy Abdulla bin Touq said in October.
United Arab Emirates Dirham Exchange Rate
