UAE business activity at 38-month high – News

The latest Purchasing Managers Index data showed that purchases rose at their highest level in seven years as lower fuel prices helped ease the burden on company spending and encouraged lower prices on other items

The UAE, the second largest economy in the Arab world, will grow by 3.8% in 2021 and is expected to grow by 5.4% in 2022 and 4.2% in 2023. — file photo

Businesses in the UAE posted a strong rise in activity in August, the latest data showed, largely driven by lower fuel prices and higher demand, despite heightened fears of a looming global recession.

Despite the normal summer slump, the UAE Purchasing Managers’ Index (PMI) continued to move higher in August, reaching a 38-month high of 56.7, suggesting that business conditions in the non-oil sector are improving positively.

The latest PMI data showed purchases rose at the highest level in seven years, as lower fuel prices helped ease the burden on company spending and encouraged lower prices on other items. Sentiment for the year ahead fell to its lowest point in 17 months in August amid warning signs that the global economy could enter a recession by the end of 2019, even as businesses reported stronger demand conditions and new orders were boosted by lower selling expenses this year. , said a panelist on the S&P Global UAE Purchasing Managers Index survey.

The UAE, the second-largest economy in the Arab world, will grow by 3.8% in 2021 and is expected to grow by 5.4% in 2022 and 4.2% in 2023, according to the latest forecast from the central bank. The International Monetary Fund expects the economy to grow by 4.2% this year, while the UAE NBD forecasts growth of 5.7%.

The UAE’s hospitality sector, a major economic pillar, is poised for a significant upswing as global travel restrictions ease and tourist arrivals are expected to surge during the 2022 FIFA World Cup in Qatar. Dubai welcomes 7.1 million international tourists as of June 2022, a 183% increase in overnight visitors year-on-year. Hotel occupancy in the UAE is expected to exceed 75 percent in the coming months, industry sources said.

S&P Global Market Intelligence economist David Owen said sales growth accelerated further, supported by additional efforts to offer discounts to customers.

“Input costs fell notably for the first time since January 2021, as lower fuel prices helped ease the burden on corporate spending and encouraged lower prices on other items. Another decline marked a sizeable shift in inflationary pressures, Inflationary pressures have reached a new high for the year in the November-June period.”

Owen said the data offered hope to other countries struggling with persistent inflation, even as concerns remained that tight global energy supplies would continue to drive prices higher. “Despite positive signs in output and new orders, businesses showed greater hesitation about the duration of this strong growth phase. Business confidence for the coming year fell to 17 months in August amid warning signs that the global economy may be entering low point to a recession by the end of the year,” Irving said.

The PMI survey shows that the rebound in sales and the reduction in expenses encourage companies to increase input purchases and employment, and the growth rate of the former hit a three-year high. Businesses benefited from a drop in input costs in August, the first drop since January 2021, data showed. marginal pace,” the survey report said.

In Saudi Arabia, business growth hit a 10-month high in August as improving demand conditions boosted new business and activity.

The seasonally adjusted S&P Global Saudi Arabia Purchasing Managers’ Index came in at 57.7, the highest since October 2021, up from 56.3 in July.

“Saudi Arabia PMIs pointed to increased resilience in the non-oil economy in August, with business activity and sales continuing to rise sharply despite reports of heightened global economic distress,” Owen said.

Total new orders rose at the fastest pace since October last year, driven by improving customer demand, higher exports and a broad recovery in economic conditions since the pandemic.

— issacjohn@khaleejtimes.com