UAE business confidence hits new high
Business confidence in the UAE hit a fresh high in June as new investments, marketing initiatives and an anticipated economic upturn underpinned positive sentiment, latest data from a survey shows.
Buoyed by strong inflows of new business and output growth, the health of the non-oil private sector improved in June to the greatest extent in the year-to-date, said the survey report.
"Promotional activity helped to stimulate client demand, reflected by new order books expanding at the fastest pace since December last year. Despite firms ramping up output, backlogs of work built up at a record pace," said the report based on the survey sponsored by Emirates NBD and produced by IHS Markit.
Khatija Haque, head of Mena Research at Emirates NBD, said the headline purchasing managers index (PMI) rose to a 2018-high in June, reflecting a sharp increase in both export and domestic new orders as well as output.
However, in spite of this strengthening demand, there was almost no job growth or increase in wages in the UAE's private sector last month, as firms continued to focus on efficiency and cost containment, she said.
The seasonally adjusted Emirates NBD UAE PMI - a composite indicator designed to give an accurate overview of operating conditions in the non-oil private sector economy - rose to 57.1 in June, up from 56.5 in May. The latest expansion in the non-oil private sector was the strongest in 2018 so far and well above the series' historical average (54.7). Meanwhile, input price inflation further softened from the peak seen in January.
Michael Armstrong, ICAEW regional director for the Middle East, Africa and South Asia, said the UAE is on the right track to economic diversification and is implementing the necessary fiscal reforms to support these efforts.
"We are encouraged by the recent announcements to reform business ownership laws and residency visa rules. This will definitely help in attracting more foreign direct investment and in creating more stability in the market," said Armstrong.
"The overall business sentiment is becoming more positive with the non-oil private sector getting more upbeat of a fast rebound in the wake of a string of reforms and stimulus package announced by the authorities along with expansionary fiscal measures," said MAK Harid, managing director of Paradigm Financial Services.
According to Emirates NBD, the output growth across the non-oil private sector accelerated to a seven-month high during June's survey.
"Promotional activity, business investment and solid client demand from both domestic and export markets was linked to June's steep expansion of new order books. The rate of growth was the strongest in the year-to-date. Reflecting a sharp improvement in new business and easing job creation, backlogs of work increased at a record pace in June," said the report.
The bank noted that purchasing activity growth eased to a two-year low during the latest survey. "That said, the pace of expansion remained solid overall. Meanwhile stocks of purchases held at non-oil private sector firms increased at the slowest pace in 25 months during the most recent survey."
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