The United Arab Emirates’ non-oil private sector continued its solid growth in August, only marginally below an expansion in July that was the fastest pace in two years, a business survey showed.
The seasonally adjusted IHS Markit UAE Purchasing Managers’ Index (PMI), which covers manufacturing and services, dipped to 53.8 in August from 54.0 in July, remaining well above the 50.0 mark that separates growth from contraction and slightly below the series average since 2009 of 54.1.
The UAE was hard-hit by the double blow of last year’s historic oil price crash and the COVID-19 pandemic, though many restrictions were scaled back over a year ago and the economy has been in recovery.
Output, a sub-index that measures business activity, rose to 58.6 in August from 57.1 in July, the second consecutive highest reading since July 2019.
“PMI data signalled another robust rise in business activity across the non-oil sector in August, as demand continued to rebound from the pandemic. This increasingly fed through into firms’ hiring decisions, with employment numbers ticking up at the fastest rate for more than three-and-a-half years,” said David Owen, economist at survey compiler IHS Markit.
The employment sub-index, which contracted for 12 straight months in 2020 and four months this year, rose to 51.6 in August from 50.7 in July, its highest reading since January 2018.
Sentiment for future output, however, was the lowest since March, dropping for the second consecutive month as uncertainty around the COVID-19 pandemic and stiff competition weighed despite optimism around Expo 2020, the world fair that will be hosted by Dubai starting next month. The sub-index remained in expansionary territory, though weak compared to the series average.
“Of the 11% of firms reporting positive expectations, many were hopeful of benefiting from the Expo 2020 later this year, while others cited a broad-based improvement in market conditions as demand recovers,” the PMI report said.