UAE’s non-oil outlook positive despite slight PMI dip in May  

Update UAE’s non-oil outlook positive despite slight PMI dip in May  
The S&P Global report noted that improved operating conditions in the UAE drove business confidence to one of its strongest levels since October 2021. (Shutterstock)
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Updated 05 June 2023

UAE’s non-oil outlook positive despite slight PMI dip in May  

UAE’s non-oil outlook positive despite slight PMI dip in May  

RIYADH: The UAE’s non-oil private sector growth outlook remained positive in May, even as the seasonally adjusted S&P Global Purchasing Managers’ Index fell to 55.5 compared to 56.6 in April. 

The S&P Global report noted that improved operating conditions drove business confidence to its strongest levels since October 2021.    

According to the index, PMI readings above 50 show non-oil private sector growth, while those below 50 signal contraction.    

“The UAE PMI pointed to another strong performance across the non-oil sector midway through the second quarter of 2023. Despite slipping from April’s six-month high of 56.6, the latest headline reading of 55.5 signaled a robust improvement in business conditions, driven by marked upturns in activity and new work,” said David Owen, senior economist at S&P Global Market Intelligence.    

He added: “The Future Output Index showed optimism rising to the highest level since October 2021, with firms pinning their hopes on projections that the strong demand momentum will continue.”   

Egypt’s May non-oil PMI rises to 47.8 

Egypt’s non-oil private sector growth outlook witnessed its softest downturn in 15 months as efforts to stabilize the demand environment paid off.   

While remaining below the 50 mark, the country’s PMI increased for the second month in a row, going from 47.3 in April to 47.8 in May, showed the report. 

Despite the adverse effects of higher prices on sales, output and purchasing, companies indicated that inflationary pressures were gradually alleviating.   

However, the S&P noted that the North African country still experienced a significant contraction in activity levels. In addition, non-oil companies continued to face difficulties, resulting in a gloomy outlook for activity and yet another reduction in employment.   

“The Egypt PMI remained in negative territory in May but showed further promise that current economic headwinds were beginning to dissipate. The headline index rose for the second month running to 47.8, while the two main sub-indices of output and new orders rose to their highest levels in 17 and seven months, respectively,” stated Owen.   

Qatar’s non-oil PMI grows for 6th time in 7 months 

Qatar exhibited yet another improvement in its non-energy growth for the sixth time in seven months, according to the S&P Global report.   

Hitting a PMI of 55.6 in May from 54.4 in April, the country recorded its biggest improvement in business conditions since July of last year.   

The main driver of the PMI increase was a surge in output and new orders, while employment and stocks of purchases also played a role.   

Yousuf Al-Jaida, CEO of the Qatar Financial Center Authority, said: “Qatar’s non-energy private sector remained on an upward growth trajectory in May, as inflows of new business accelerated in part due to tourism and demand for financial services.” 

“The sub-indices for output (59.6) and new orders (60.1) boosted the headline PMI to a 10-month high of 55.6, well above the long-run trend level since 2017 of 52.3,” he added.   

Al-Jaida further noted that financial services remained on top in terms of performance. These firms also increased their charges, compared to the slight change across the rest of the non-oil sector.   

The report showed that the rate of purchase price inflation has risen to its highest level in almost two years, suggesting that increasing input demand is reflected in prices.   

“Supply chains were able to cope with greater demand, as lead times on inputs fell further during the month,” said Al-Jaida.