اKHALEEJ TIMES, Thursday, Dec 7, 2017 | Rabi Al Awwal 18,1439
Strong local demand spurs UAE non-oil growth in November
The UAE's non-oil sector witnessed a strong growth on the back of new orders
from local companies.
The Emirates NBD Purchasing Managers' Index (PMI) for the UAE rose to 57.0 in
November from 55.9 in October, signalling a faster rate of growth in the non-oil
private sector last month.
The PMI reading was the highest since August, and the second highest reading
Output and new orders rose at a faster rate last month, despite an outright
decline in new export orders. "This suggests that the driver of growth is
domestic demand. The November survey confirms our view that the UAE's non-oil
sector will likely see strong growth in the fourth quarter of this year, as both
households and business boost purchases before VAT comes into effect at the
start of next year," said Khatija Haque, head of Mena Research at Emirates NBD.
However, job growth remains soft (the index slipped to 50.9 in November; a
five-month low) and there is also little evidence of wage growth, she said.
The muted employment and wage data suggests that any boost to household
consumption this quarter will likely prove temporary. Input cost inflation
accelerated in November, on the back of higher purchase costs.
However, firms were unable to pass on these higher costs, with average selling
prices declining (albeit modestly) once again in November. Purchasing activity
and accumulation of pre-production inventories has been sharply higher
year-to-date compared with last year.
While some of this might be attributed to pre-VAT stockpiling, survey
respondents indicated they had boosted inventories ahead of an expected upturn
in sales. The overall level of business optimism remained high in November,
although the index slipped slightly from October to 59.2. Firms cited projects
related to Expo 2020 as one reason for their optimism about the coming year.