Performance of the UAE Non-Oil Private Sector in May 2024: Key Points
Strong Growth:
The overall performance of the UAE non-oil private sector remained strong in May, driven by robust demand and increased purchasing.
The UAE’s headline Purchasing Managers’ Index (PMI), which reflects operating conditions, rose to 55.3 points, exceeding the long-term average.
Dubai’s PMI also increased, indicating an improvement in business conditions.
Production Pressures:
Companies faced a record high backlog of work due to capacity constraints, with sales remaining strong and the impact of April’s weather conditions lingering.
This led to the slowest growth in production in 16 months.
Companies ramped up hiring and purchases of production materials to try and keep up with demand.
Rising Costs:
Production input costs increased at their fastest rate in nearly two years, fueled by rising demand for materials and inventory replenishment.
This resulted in the fastest rise in selling prices since April 2021.
Wage growth accelerated to its fastest pace in over six years, adding to cost pressures.
Future Optimism:
- Confidence in future output improved as companies anticipate stabilizing economic conditions, higher sales, and increased profits and promotional activity.
- The rebound in hiring and purchasing indicates that companies are taking steps to overcome current challenges.
- The sector is expected to resume strong growth once capacity constraints are addressed.
The UAE Non-Oil Private Sector Will Continue its Growth
- Recovery from the impact of April’s weather is still ongoing.
- Continued strong demand is a positive sign.
- Companies are focused on rebuilding production levels, hiring workers, and increasing inventory.
World Environment Day this year attaches special importance to combating desertification, which is a high priority for the UAE as a desert country, noting that the country is taking many measures to mitigate the risks of drought and improve food security. pic.twitter.com/JX8aEGBtg6
— UAE Voice (@uae_voiceeng) June 5, 2024
The performance of the non-oil private sector in the UAE suggests a positive trend despite some short-term challenges.
Efforts to boost capacity and robust demand provide a foundation for continued growth in the coming months.
