UAE Non-Oil Growth Hits Four-Month High as Orders and Exports Recover
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Growth in the UAE’s non-oil private sector accelerated in July to its strongest pace in four months, supported by a recovery in new orders and export activity following a sharp slowdown in June.
The S&P Global UAE Purchasing Managers’ Index rose to 52.7 in July from 50.8 in June. A reading above 50 indicates an improvement in business conditions from the previous month; it does not mean the economy grew by 52.7%.
New orders increased at their fastest pace since February, while export business returned to growth for the first time since March and recorded its strongest increase in a year. Companies linked the improvement to stronger activity across the Gulf and some easing in regional disruption.
Employment also returned to growth after the steep reduction recorded in June, reflecting stronger workloads and improved operating conditions.
The survey was not entirely positive. Business confidence weakened for a third consecutive month and fell to its lowest level since March, as uncertainty surrounding the Strait of Hormuz continued to cloud the outlook.
Backlogs of work rose at their fastest pace in four months because of firmer demand and freight congestion. Input-cost inflation also moved closer to the recent high recorded in April.
Companies raised their selling prices again, although only modestly, suggesting that businesses passed on part of their increased costs without substantially weakening the recovery in demand.
The findings show that the non-oil sector regained some momentum in July, but growth in the coming months will remain sensitive to regional trade conditions, transport costs and developments around the Strait of Hormuz.
