Dubai: The UAE's purchasing managers' index (PMI) signalled a further improvement in operating conditions across the UAE's non-oil private sector economy in June despite a marginal fall in the index.
The index, compiled by HSBC Holdings Plc and Markit Economics, declined to 55.2 in June from 56 in May this year. The index is based on data compiled from monthly replies to questionnaires sent to purchasing executives in approximately 400 private sector companies representing manufacturing, services, construction and retail.
"The headline number has softened for a second consecutive month, suggesting that the lift the UAE received from unrest elsewhere may be fading. There's enough in the data, though, to persuade me that the underlying recovery is still underway," said Simon Williams, Chief Economist for the Middle East and North Africa at HSBC.
The June PMI survey showed output by non-oil private sector firms rose for the 17th month in June, albeit at the slowest pace since last September.
Panellists indicated that gains in new business underpinned the latest expansion of output, which was more marked for medium-sized companies than for small or large firms.
Anecdotal evidence
Growth of total new work was the second-sharpest in the 23-month survey history in June. Anecdotal evidence suggested that favourable market conditions, new product launches and competitive pricing all supported demand.
New export orders also rose at a near-survey record pace, despite the rate of expansion slowing.
UAE non-oil private sector output grew for the 17th month in June.
Although the rate of increase slowed to the weakest for nine months, it remained above the series trend with around one-quarter of firms noting growth. Panellists indicated that activity rose to accommodate further inflows of new business. By size, medium companies registered the sharpest rate of expansion.
"Output was up in June, if less markedly than in May, the new order book still looks strong and employment is still gaining. Output price rises also lost pace in June, supporting our view that overall inflationary pressures are weak and likely to stay that way," said Williams.
The seasonally adjusted New Orders Index was virtually unmoved in June, remaining close to April's series record peak. Improved market conditions, new product launches and competitive pricing were all cited by respondents as reasons for higher demand for UAE non-oil private sector goods and services.
Growth of new export business for non-oil private sector companies slowed slightly at the end of the second quarter.
Survey members reported that good conditions in export markets and new product launches underlay the latest increase in foreign demand. Large firms posted the sharpest rise in new export work.
For only the second time in the survey history, backlogs of work by non-oil private sector companies rose in June.
