The UAE's non-oil private sector seems to have regained some momentum during the second quarter, with activity hitting the fastest pace in eight months during May. But, worryingly, employment gains are still bound within a narrow range.
The gains were "helped by a pick-up in new business growth”, according to the findings from a survey sponsored by Emirates NBD and produced by Markit.
However, the data pointed to areas of underlying fragility, as both employment and input buying rose only slightly. The expansion of the latter was the least marked since September 2011. Cost pressures intensified but remained historically subdued, while output prices fell for the seventh month running.
"The improvement in the UAE PMI was mainly due to strong growth in output last month, with new business picking up as well” said Khatija Haque, Head of MENA Research at Emirates NBD. "This confirms our view that the non-oil sector of the UAE is continuing to expand, albeit at a slower rate than last year.”
Adjusted for seasonal influences, the headline Emirates NBD UAE Purchasing Managers' Index (PMI) – a composite indicator designed to give an accurate overview of operating conditions in the non-oil private sector economy – posted 54.0 in May, up from 52.8 in April. This is the second-highest in six months, though below the series average (54.5). It also signalled an acceleration in growth following a slowdown in the previous month.