Non-oil growth in UAE is lowest for five months, but remains in positive territory
Non-oil growth in the United Arab Emirates (UAE) slowed to its lowest level for five months in August, new data showed on Tuesday, as employment numbers fell.
Emirates NBD's Monthly Purchasing Mangers' Index (PMI) - a composite measure of operating conditions in the non-oil economy - fell to 55.0 last month, down from 55.8 in July. This represented the slowest rate of growth recorded since March and was below the index’s historical average growth rate.
The PMI remained in positive territory, with any score above 50.0 representing growth in the non-oil economy and any score below representing contraction.
Although optimism among businesses in the non-oil sector accelerated to a record high, with many firms reporting new product launches or projects related to Expo 2020, employment numbers contracted for the first time since the survey began in August 2009.
In a press release announcing the survey's results, Emirates NBD's head of MENA Research, Khatija Haque, said: "The softness in employment, which has been evident to some extent since 2016 but appears to have slowed even further this year, is surprising in the context of strong reported growth in output and new orders in the private sector over the same period."
She added that the data suggested that “while activity in the non-oil private sector is expanding at a similar rate to last year, margin pressures on firms mean that this growth in new work and output is not translating to job creation or higher wages”.
"As a result, we retain our view that private consumption is unlikely to contribute significantly to GDP growth this year, with government spending and investment, and net exports likely to be the engines of growth," Haque said.
Jobs growth slowed in Saudi Arabia, but remained in positive territory, data for the kingdom showed.
The headline PMI rate for the kingdom rose slightly to 55.1 in August, from 54.9 in July on the back of stronger output and a growth in new orders. However, the survey also found that average selling prices fell for the second month in a row, despite average cost price increases, with some firms reporting that domestic demand had been supported by promotional activity.
Egypt's economy, meanwhile, continued to show signs of benefitting from the country's reform programme, with the headline index rising to 50.5 in August, from 50.3 a month earlier - the second consecutive month in which PMI data was positive after a long period of contraction. New orders and exports both continued to rise, but firms surveyed reported sharp cost inflation.
Daniel Richards, MENA Economist at Emirates NBD, said the second month of positive data for Egypt suggested that "the Egyptian non-oil private sector is beginning to see the protracted recovery we had projected would take hold in the new fiscal year".
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