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Business activity in the UAE’s non-oil private sector regained momentum in May, according to the latest PMI data for the country.

The seasonally adjusted Emirates NBD UAE Purchasing Managers’ Index, which covers manufacturing and services, rose to 54.0 last month from 52.8 in April. Anything above 50 means business is expanding and anything below, that it is contracting.

The latest figure was the second-highest in six months, albeit still below the long-run series average (54.5). It also signalled an acceleration in growth following a slowdown in the previous month.

“The improvement in the UAE PMI was mainly due to strong growth in output last month, with new business picking up as well. This confirms our view that the non-oil sector of the UAE is continuing to expand, albeit at a slower rate than last year,” says Khatija Haque, Head of MENA Research at Emirates NBD.

The overall improvement in the health of the sector was driven by higher output in May. The rate of expansion was the quickest since last September.

Data confirmed that new orders had risen solidly in May. Growth was faster than in April, but remained much slower than the survey average. Contributing to the relative weakness of total new work was a negligible rise in exports. Despite signalling an increase for the first time in three months, the respective index posted one of its lowest readings since the series began in 2009.

Inspite of faster expansions in output and new business, growth of purchasing activity slowed in May. Moreover, the extent of the slowdown was substantial – the latest rise was the weakest in 56 months. 

Employment remained an area of concern in May. While job creation resumed following a stagnation in April, the rate of hiring was marginal and among the weakest seen in nearly seven years of data collection. Incoming new projects therefore placed pressure on operating capacity, though backlogs rose only slightly.