According to a recent survey, non-oil businesses in the United Arab Emirates (UAE) showed remarkable growth in February, recording their fastest pace in five years due to an increase in output led by new orders and market demand.
The S&P Global UAE Purchasing Managers’ Index (PMI) rose from 56.6 in January to 57.1 in February, indicating a sharp upturn in overall operating conditions. The survey revealed that businesses reported the sharpest rise in output levels since mid-2019.
David Owen, Senior Economist at S&P Global Market Intelligence said,
“One of the PMI’s largest components, the Output Index, rose to its highest level since June 2019, pointing to a rapid expansion of business activity as firms look to take full advantage of strong market growth and maintain a competitive edge.”
Recruiting activity increased in February to support workloads and offset backlog growth. Employment levels expanded to the fastest degree since last May. Companies are optimistic about the year ahead, with business expectations suggesting that companies are positive about the year ahead, although concerns of a crowded market remain and appear to dampen sales growth further.
However, there were capacity pressures in February, as the disruption to shipping lines in the Red Sea started to affect local supply chains. According to the PMI survey, vendor performance improved to the least extent in seven months, while volumes of backlogged work rose at the sharpest rate in almost four years. Despite this, overall supply chain performance improved, albeit at the weakest rate since last July, suggesting that the impact on vendors is so far limited.
Overall, the survey indicates that the UAE’s non-oil businesses are on a growth trajectory and are set to continue growing, although some challenges remain such as capacity constraints and the impact of a crowded market.
