UAE PMI Analysis – February 2024
The UAE PMI (Purchasing Managers’ Index) indicated strong growth in the non-oil sector during February 2024.
Moreover, the PMI rose from 56.6 in January to 57.1 in February which is the highest level in 5 years.
Business activity in the UAE grew at its fastest pace in 5 years, fueled by a strong rise in production.
While the new orders from clients increased, but at a slower pace than before, suggesting a potential slowdown in production growth in the future.
Some companies faced supply chain challenges due to delays in receiving production materials.
However, businesses are optimistic about continued improvement in activity, demand, and profits in the future.
Business Optimism Surges to Four-Month High
Companies anticipate sustained improvements in activity, demand, and profits.
David Owen, Senior Economist at Standard & Poor’s Global Market Intelligence, said:
“The UAE PMI continued to signal strong upwards momentum in the non-oil economy at the start of 2024, with February’s reading of 57.1 up from 56.6 in January.
The Output Index, one of the PMI’s largest components, rose to its highest level since June 2019.
Pointing to a rapid expansion of business activity as firms look to take full advantage of strong market growth and maintain a competitive edge.”
The UAE stated in a statement that its oil production will remain two million and 912 thousand barrels per day until the end of June of the current year 2024. After that, and to support market stability, these additional reduction amounts will be gradually restored. pic.twitter.com/yQK3ngZWki
— UAE Voice (@uae_voiceeng) March 4, 2024
He added: “There were clear signs of pressure on production capacity, with backlogs of work rising at the fastest pace in nearly four years as shipping disruptions in the Red Sea led to delivery delays.
The overall improvement in supply chain performance was the weakest since July last year, but it still remained positive, suggesting that supplier disruption is so far limited.”
Owen continued: “The business outlook suggests that companies are optimistic about the year ahead, although there are concerns that ongoing market congestion is starting to weigh on sales growth. New orders rose at the weakest pace in six months, suggesting that output growth may also start to moderate.”
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