The UAE’s non-oil private sector experienced increased growth in February, which was the strongest upturn since October of last year, according to a recent business survey.
The S&P Global UAE Purchasing Managers’ Index (PMI) showed a slight increase to 54.3 in February, following a 12-month low in January, after being seasonally adjusted. The report noted that business expectations strengthened and supply chains performed well, despite robust demand for inputs, with lead times improving at the fastest rate in almost three-and-a-half years. However, although demand trends were still strong, there were some indications of softening, as new business rose to the smallest degree since September 2021. David Owen, Senior Economist at S&P Global Market Intelligence, noted that the S&P Global UAE Purchasing Managers’ Index (PMI) showed a faster rate of output growth in February, which was the first time in four months.
Furthermore, expectations for future activity increased to a four-month high. However, the latest upturn in new business was the slowest in 17 months, which suggests that the improved growth picture may be short-lived despite the underlying demand strength. Rising demand for input led to an increase in purchase prices, which had been stagnant for the previous two months. Additionally, some firms indicated that shipment fees had risen, resulting in an overall increase in input costs for the first time since November 2022.
Jobs were added at a marginal pace in February, while backlog volumes rose modestly but to the least extent in 20 months, in line with the slowdown in sales growth. Looking ahead, non-oil firms expressed a stronger degree of confidence for the next 12 months in February, which was the highest since October 2022, but remained subdued by historical standards and below the 2022 average.
