UAE’s economic recovery remains strong in September

Waheed Abbas /Dubai Filed on October 5, 2021

Outlook for the year ahead improves on the back of Expo 2020, ease in travel restrictions

The UAE’s non-oil private sector’s performance remained strong in September as the new order rose strongly and business expectations improved, thanks to Expo 2020 Dubai and the loosening of the pandemic measures.

The seasonally adjusted IHS Markit UAE Purchasing Managers’ Index (PMI) stood at 53.3 in September, down from 53.8 in August, but above the readings seen in the 23 months before July. The index was firmly in growth territory, having exceeded the 50.0 mark in each of the latest ten months.

A reading above 50 indicates an expansion of economic activity and a reading below 50 shows an overall decrease in activity.

“With the Expo 2020 beginning, the UAE economy appears in a good shape. The PMI ticked down to 53.3 in September but still pointed to a strong improvement in non-oil business conditions, as firms continued to see a recovery in demand from the pandemic. A loosening of global travel measures helped to support the rise in new business,” said David Owen, economist at IHS Markit.

The UAE’s PMI showed outlook in the year ahead improved slightly in September, after slipping to a five-month low in August. Positive forecasts were mainly linked to an expected recovery in demand as Covid-19 travel restrictions are loosened. Some firms also expect a boost in sales from Expo 2020.

New orders were also up strongly in September, thanks to a continued recovery in footfall and contracts related to Expo 2020. In addition, some firms noted that price discounting had encouraged clients to place more orders.

Notably, average prices charged in the non-oil sector fell at the fastest rate since November 2020.

The survey results showed that the companies’ backlogs of work rose to the greatest extent in one-and-a-half years during September, as firms often mentioned not having enough capacity to fulfil new orders whilst working on current projects.

Job creation slowed to a marginal rate, albeit from a 43-month high in August.

However, higher raw material prices continued to exert upward pressure on input costs in September, although the upturn was the least marked in four months.

Waheed Abbas

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