Credit By: Khaleej Times
The Purchasing Managers’ Index (PMI) for the UAE, a key indicator reflecting non-oil economic conditions, kicked off 2024 on a robust note, registering its second-highest reading in four-and-a-half years. The S&P Global UAE PMI climbed from 57.0 in November to 57.4 in December, indicating a significant expansion driven by a surge in new business intakes, contributing to heightened output levels. The positive economic outlook aligns with optimistic growth projections by the Central Bank of the UAE and various international institutions.
Stellar Year-End Performance
As 2023 concluded, the UAE’s economic trends exhibited exceptional strength, setting the stage for a promising start to the new year. The PMI report unveiled a substantial increase in output, propelled by elevated order book volumes and improved sales pipelines. Notably, projections for future activity were among the strongest since early 2020, underscoring the confidence of businesses in sustained growth.
Key Indicators and Insights
- New Business Intakes: A sharp upturn in new business intakes contributed significantly to the marked expansion in output levels, reflecting increased order book volumes and improved sales pipelines.
- Future Activity: Projections for future activity were robust, with sentiment data indicating that businesses expect the growth momentum to continue. Year-ahead expectations were among the highest recorded since before the Covid-19 pandemic.
- Price Pressures: Optimism was supported by a softening of price pressures, as purchasing costs experienced the least degree of increase in almost a year. Mild wage pressures allowed firms to offer promotions and maintain competitive pricing.
Market Dynamics and Sentiment
The survey report emphasized a robust improvement in the health of the non-oil private sector. The rise in new order volumes marked the best quarterly sales performance in four-and-a-half years. Despite signs of slowing momentum in external markets, strong domestic conditions supported advancements in new work and sales pipelines.
Employment Trends and Expansion
Firms exhibited a positive sentiment by expanding staffing levels, aligning with the series’ long-run trend. The pace of job creation was noteworthy, reflecting ongoing project work, marketing efforts, and the upturn in sales. Over a quarter of surveyed firms reported a monthly expansion, maintaining the growth pace from November.
Growth Forecast and Economic Outlook
The Central Bank of the UAE’s upward revision of the non-oil growth forecast to 5.7%, compared to the previous projection of 4.3%, indicates the continued robustness of private sector economic activity. Analysts, including Ehsan Khoman, MUFG Head of Research – Commodities, foresee the non-oil sector maintaining its strength, driven by well-established infrastructure and a bullish outlook. Increased business confidence, government reforms, and expanded household spending contribute to the positive growth prospects.
Economists and analysts highlight the momentum in the UAE’s non-oil GDP, supported by business confidence, government initiatives, and rising household expenditures. The OPEC’s assessment emphasizes the resilience of the second-largest Arab economy, especially in sectors like tourism, leisure, and real estate. The tourism sector, constituting over 16% of the country’s GDP, exhibited a rebound surpassing pre-pandemic levels, with Dubai’s visitors rising by 19% year-on-year in H1 2023.
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