The UAE non-oil private sector maintained a positive performance at the end of the second quarter of the year with sharp increases in output and new orders while business confidence remained strong, said Emirates NBD in its latest PMI survey.

Sales were again often secured through the use of price discounting, while staffing levels were left broadly unchanged, the report said.

The headline seasonally adjusted Emirates NBD UAE Purchasing Managers’ Index (PMI) – a composite indicator designed to give an accurate overview of operating conditions in the non-oil private sector economy – posted 57.7 in June, down from 59.4 in May but still signalling a marked monthly improvement in business conditions in the UAE’s non-oil private sector.

Commenting on the UAE PMI survey, Khatija Haque, head of Mena Research at Emirates NBD, said: “The recent PMI surveys indicate that growth in the UAE’s private sector has accelerated in Q2 2019. Indeed the average PMI reading for the second quarter was the highest since Q4 2014.  While firms have reported growth in output and new orders, this has come on the back of further price discounting.  As a result, there has been no real boost to hiring as businesses remain focused on keeping costs down.”

Key findings:
    
•    Strong expansion in new orders, but price discounting continues
•    Growth of business activity remains elevated
•    Employment levels broadly unchanged


June data pointed to a sharp expansion of business activity, and one that was only slightly weaker than May’s survey record. Marketing activities were often reported as being behind the increase in overall activity, while economic conditions were also signalled as having improved.

A similar picture was seen with regards to new orders, with growth remaining substantial despite softening from the previous month. A number of panellists reported that competitive pricing had enabled them to secure sales, and this was reflected in a ninth consecutive monthly decrease in output prices.

Companies were able to offer discounts thanks to a lack of cost inflationary pressure. Overall input prices rose only marginally in June. Purchase costs increased slightly, while wages and salaries were broadly unchanged.

The recent trend of only marginal changes in workforce numbers continued in June, with almost all respondents seeing no change in employment during the month. As has been the case throughout the past two-and-a-half years, backlogs of work increased amid reports of delays in receiving payments from customers.

Purchasing activity grew at a record pace for the second month running as companies responded to rising new orders. Stocks of purchases also increased, albeit at a reduced pace that was the softest since February.

Despite improving demand for inputs, suppliers’ delivery times continued to shorten markedly. Panellists indicated that vendors had speeded up deliveries in line with requests.

Non-oil companies remained strongly optimistic that business activity will increase over the coming year, although sentiment eased again from April’s record high. Expectations of further new order growth were a key factor behind optimism, while next year’s ‘Expo 2020’ was also widely mentioned. – TradeArabia News Service