UAE non-oil private sector growth weakens as pandemic impact lingers - PMI

The United Arab Emirates' non-oil private sector expanded for a seventh consecutive month in June, though at a pace slightly lower than in May as coronavirus measures continued to hamper business activity, a business survey showed.

The seasonally adjusted IHS Markit UAE Purchasing Managers' Index (PMI), which covers manufacturing and services, edged down to 52.2 in June from 52.3 in April, hitting a four-month low.

Output growth was unchanged due to raw material shortages while new order growth weakened as export sales fell sharply amid flight cancellations and other COVID-19-related measures.


Prices were driven up by supply problems, with purchase costs rising to their highest in three months.

"Business conditions continued to improve at only a gradual pace in June, adding evidence to a mixed initial recovery from COVID-19 in the UAE non-oil sector", said David Owen, economist at IHS Markit.

"Firms often mentioned that material shortages had hampered output growth, while new sales were curtailed by travel restrictions."

Still, sustained growth in new business led firms to hire workers in June. Employment rose for the first time in five months and at a rate which, though only marginal, was the fastest since January 2019.

Expectations for future output among survey respondents continued to improve but only gradually as hopes in a recovery in tourism and in the vaccination programme were countered by uncertainty over the progress of the pandemic.