Image Credit: Gulf News

Dubai: The UAE Purchasing Managers’ Index was broadly unchanged in April at 56.1, compared with March’s 19-month high of 56.2. Output and new orders growth remained very strong although slightly slower than March.

The latest survey data showed that business conditions across non-oil private sector firms in UAE continued to improve at the start of the second quarter. Employment rose in April but the rate of growth remains weak, with just 5.2 per cent of firms surveyed reporting higher employment last month. The majority of firms kept employment unchanged in March despite continued new orders growth. As a result, the backlogs of work continued to rise in April, but at a slower rate than March.

“The UAE PMI remained little changed in April from March, at both a headline level and in terms of the detail. The PMI shows that while overall activity was firm going into the second quarter, companies are still facing significant challenges as job creation remains subdued and pricing power is limited,” said Tim Fox, Head of Research and Chief Economist at Emirates NBD.

The PMI survey, sponsored by Emirates NBD and produced by IHS Markit, showed slower export orders growth appears to have weighed on overall new orders expansion. Survey panellists cited new projects, stronger underlying demand and improved economic conditions as supporting output and new orders growth in April.

During April, sharp growth of purchasing activity was recorded and as a result, the pace of pre-production inventory accumulation climbed to a record high, as panellists continued to build stocks due to projections of further improvements in demand.

Non-oil private sector firms operating in UAE faced divergent price trends at the start of the second quarter. Firms that reported higher cost burdens blamed a general increase in market prices for raw materials and higher demand for inputs.

The rate of inflation was steady and only slightly slower than the preceding month. On the other hand, firms reduced output charges at a modest pace, the first fall in three months. There were reports that intensive competition led firms to offer discounts to attract customers.

Business optimism remained high at 59.9 in April, slightly lower than the March reading of 61.7. Overall, the PMI survey for the UAE suggests that the non-oil sector expanded at a robust rate last month, maintaining the momentum that has been evident since the start of this year.