UAE non-oil private sector growth remained steady in September

Job market remained sluggish for the second consecutive month, according to Emirates NBD PMI survey

Over half of those surveyed said that “higher salaries and improved perks and benefits” would boost their motivation at work. Paulo Vecina / The National

The growth in the UAE’s non-oil private sector economy remained steady in September on the back of a sharper rise in new orders, however, the job market was sluggish for the second month in a row, according to the latest survey by Emirates NBD.

The seasonally adjusted Purchasing Managers’ Index – a composite indicator designed to give an overview of operating conditions in the non-oil private sector economy – climbed to 55.3 in September from 55 in August. A reading above 50 suggests the non-oil economy is growing, while a reading below 50 indicates a contraction.

The September data indicated a further rise in output across the UAE’s non-oil private sector. The rate of growth remained sharp and above the historical average, but it did slip to a five-month low in the latest survey, compiled by Emirates NBD and produced by IHS Markit, a financial information services company.

“The headline UAE PMI stood at 55.3 in September, the third month in a row with a reading at the 55-handle.  This signals a steady expansion in the non-oil private sector in Q3 2018,” Khatija Haque, head of Middle East North Africa research at Emirates NBD, said.

“Backlogs of work rose again in September – unsurprising given strong output and new work growth with no increase in employment – but at the slowest pace since May.”

Business confidence among the purchasing managers remained strong in the survey period. Projects related to Expo 2020, successful new product launches and planned business expansions underpinned optimism towards future growth prospects.

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Payroll numbers across the non-oil private sector decreased for the second month running in September, the first consecutive monthly decline in employment since the survey’s inception in August 2009. Nonetheless, the rate of job shedding eased since August and was only marginal overall, according to the survey.

Inflows of new business improved during September. The rate of growth was steep and above that recorded in August. Survey data inferred that part of the increase in growth was driven by stronger foreign demand, which increased for the sixth month running.

Partly reflecting an uptick in new order growth and falling employment levels, backlogs of work continued to build at an elevated pace during September, stretching the current sequence of outstanding work to 21 months, the survey noted.

Average cost burdens rose during September, following unchanged input prices in the preceding survey period. Both average purchase prices and staff bills increased. The rate of inflation was only slight overall, however.

Output charges across the non-oil private sector rose during the latest survey. The rise followed a four-month sequence of falling selling prices.