Strong start to Q2 in UAE as new business posts high 17-month growth – News

Client demand strongest since September 2020

Shoppers at a store in Dubai. In the UAE, relatively modest growth in business expenses has prompted many companies to offer price promotions. – KT file

Business conditions in the UAE’s private non-hydrocarbon sector improved at a sharp acceleration in April, kicking off a strong start to the second quarter, driven by the fastest new business growth since November 2021.

Data from the latest Purchasing Managers Index survey showed companies responded to the improving situation by sharply increasing production, increasing inventories and staffing levels. The sharp drop in selling prices has partly spurred a surge in customer demand.

David Owen, senior economist at S&P Global Market Intelligence, said the rapid increase in new orders and fading inflationary pressures led to a faster pace of expansion across non-oil economies, leading to a third straight monthly increase in the PMI.

S&P Global UAE Purchasing Managers’ Index rose further to 56.6 in April from 55.9 in March, suggesting non-oil economic performance Strong improvement.

The UAE Central Bank expects the country’s annual real GDP growth rate to grow by 4.3% in 2024, while the IMF said in its recent forecast that the UAE economy will expand at a faster rate in 2024 and revised down global growth. The outlook dipped slightly amid uncertainty about the global financial system. It expects gross domestic product to grow 3.9%, compared with 3.5% this year.

The new corporate tax, which will come into effect on June 1, 2023, will help boost the UAE’s non-hydrocarbon revenues in 2024 and 2025, enabling the country to maintain a fiscal breakeven oil price of 65, the IIF said last week. USD per barrel. Garbis Iradian, chief economist for the Middle East and North Africa at IIF, said the UAE’s non-hydrocarbon real growth rate will remain strong at 4.8% as tightening global financial conditions have limited impact on economic activity in the UAE.

The S&P global new orders index rose to its highest level since November 2021 in April, as improving market conditions and rising customer demand underpinned strong sales. In fact, just over 30% of businesses saw new orders picking up from the previous survey period, while 7.0% saw a decline.

Business conditions in the GCC have also improved, with April PMIs showing activity in the private non-hydrocarbon sector off to a strong start to the second quarter.

In the UAE, relatively modest growth in business spending encouraged many companies to offer price promotions, which helped drive the biggest increase in sales since late 2021, Owen noted. “According to panelists, efforts to improve service and boost marketing also underscored growth and supported a strong expansion of events,” he added.

As companies continued their efforts to increase production levels, employment rose, causing input inventories to rise significantly again. “While the pace of job creation was slower than March’s nearly seven-year high, it was still stronger than the survey trend. Rising demand and rapid capacity ramp-ups helped drive confidence about future activity up for a fourth straight month and The highest level since September 2022,” Irving said.

The report noted that growth in employment, while slowing from a nearly seven-year record set in March, was still above long-term trends, as companies commented on efforts to cope with high workloads and minimize pressure on capacity . “These expansions held back growth in work backlog, which slowed to the slowest in the current 22-month backlog sequence. On the other hand, strong hiring contributed to a rise in staff costs, albeit by a small, nine-month On the procurement front, the latest data point to a sharp increase in input purchases, much higher than in the previous month.”

Elsewhere in the region, Saudi Arabia’s headline PMI rose to 59.6 in April from 58.7 in March, just below the eight-year high of 59.8 set in February. In Qatar, the PMI rose to 54.4 in April from 53.8 in March, the highest reading since July 2022.