Employment levels in the non-oil private sector in the UAE accelerated in August at the fastest rate since January 2018, coinciding with a rise in business activity in the sector at its quickest pace since July 2019, according to the Purchasing Managers' Index (PMI) from IHS Markit. David Owen, an economist at IHS Markit, states that companies continue to look forward to the upcoming Expo in October, hoping it will lead to increased investment and growth in the coming months. However, with the ongoing uncertainty surrounding COVID-19, expectations for future activity have declined again, becoming the least optimistic since March.
Owen explained that supplier performance saw a slight recovery after six consecutive months of prolonged lead times for production materials. Nevertheless, the improvement was minimal, as many companies still found that global shipping issues resulted in delays in imports and rising raw material prices.
Key PMI data for August:
- The headline index fell to 53.8 points from 54 points in July.
- New orders rose for the sixth consecutive month.
- Export sales declined for the fourth straight month, while domestic sales continued to rise.
Members of the IHS Markit study committee reported an increase in fuel and raw material prices in August, which is linked to the ongoing rise in production material costs. The study indicated a slowdown in the rate of inflation since July, but it remained one of the fastest rates in the last three years, as several companies passed on the increasing costs to customers. Additionally, the average selling prices decreased for the first time since May, amid efforts by other firms to offer discounts.
