In its seasonally adjusted Emirates NBD UAE Purchasing Managers’ Index (PMI), output reached a three-month high in April, with anecdotal survey evidence suggesting that the increase is a result of stronger inflows of new business.
According to Emirates NBD, the latest figure marks a significant improvement overall, and extends the current phase of output extension that began in early 2010.
Additionally, April saw an improvement in new order books from sources within the UAE and abroad, with domestic demands for goods and services growing at a rate that is above the long-run average.
At the same time, new business from abroad returned to growth in the latest survey, increasing at a generally moderate rate.
The Emirates NBD statistics also that job creation rose in April, following a 17-month low in March.
Despite the rise in employment, robust demand continued to place pressure on operating capacity, with the strongest rise in backlogs of work recorded in a 32-month time frame.
In terms of inflation, both input cost and output charges rose in April, with average cost burdens faced by non-oil private sector firms in the UAE recorded moderate increases.
Many survey respondents reported a general increase in operating costs, linked to higher staff wages and a rising cost in raw materials.
Faced with stronger demand conditions and higher cost burdens, many firms responded by raising output charges for the first time since the beginning of 2018. The rate of output price inflation was found to be modest overall.
Sentiment about the prospects of future growth was found to have improved in the latest survey, with new product launches and improved marketing strategies underpinning business confidence.
“The improvement in business conditions in the UAE in April was driven by strong output and new order growth, including a recovery in export orders,” said Khatija Haque, the head of MENA research at Emirates NBD. “The rise in employment and selling prices, though modest, is also encouraging.”
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