Press Dossier    By Date   07/12/2017 Strong local demand spurs UAE non-oil growth in November

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 this year.

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.

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