Dubai: UAE businesses recorded their highest outputs in four months during February, with owners more confident that the trend will continue through the rest of the year. On new orders, though, February recorded only the ‘smallest degree’ of increase since September 2021, according to the PMI data from S&P Global.
With slower new orders, it meant businesses took the same approach to their hiring, with new jobs picking up at ‘only a marginal pace’ last month. Most new hiring were linked to whether businesses signed up new projects.
Even then, the February data point to improving sentiments. “After touching a 12-month low in January, the PMI picked up slightly from 54.1 to 54.3 in February, to signal a sharp improvement in operating conditions,” said David Owen, Senior Economist at S&P Global Market Intelligence. “But one that was nonetheless among the slowest recorded over the past year-and-a-half.
”Expectations towards future activity also picked up to a four-month high.”
Industry sources in the construction and services sectors confirm the upbeat sentiments, with those in the former looking to new projects from the public and private sector to provide new momentum this year.
According to S&P Global, while a number of firms saw 'demand levels improve', others noted 'strong competition and weaker exports' weighing on growth. Orders from overseas dipped a third straight month, although marginally.
Recession worries fade?
Based on the level of optimism shown, UAE businesses reckon that chances of a long and arduous global recession are receding. Inflation-linked cost pressures too seem to be manageable, at least for now.
UAE "firms (have) increased their input purchases at a sharp and notably quicker pace - the upswing in the index was the largest on record - to bolster output and plan for future work," the report notes.
There was a 'renewed' rise in purchase costs, which had been unchanged over the previous two months. "The uplift was modest, but the sharpest since July 2022," S&P Global notes. "In addition to reports of higher raw material prices, some firms noted that shipment fees had risen."
The UAE PMI gave conflicting signals for the non-oil economy midway through the first quarter of the year. After touching a 12-month low in January, the PMI picked up slightly from 54.1 to 54.3 in February, to signal a sharp
improvement in operating conditions