UAE non-oil private sector grows strongly despite inflationary pressure

S&P: UAE’s economy"continues to recover strongly from the pandemic
UAE non-oil private sector grows strongly despite inflationary pressure

The UAE Purchasing Managers’ Index, released by Standard & Poor (S&P)‘s Global, showed that the growth of UAE’s non-oil private sector activity accelerated in May, reaching a five-month high driven by continued strong demand despite inflationary pressures.   

In May, it rose from 54.6 in April to 55.6, above the 2009 median of 54.1.

The manufacturing sub-index also reached its highest level since December, rising from 61.5 in April to 62.5 in May, above the median of 57.5.

The Global Market Intelligence Economist at Standard & Poor’s, who conducted the above survey, said  the two readings suggest that the UAE economy “continues a strong recovery from the pandemic.”

He added, “Despite the end of Expo 2020, companies are nonetheless witnessing an upward push in orders and a boom in tourism, albeit partially with the help of the new decline in the desired average  asking prices.”

Input costs are rising at the fastest pace since November 2018, and companies generally see higher fuel prices and higher costs for many commodities such as aluminum, steel, wood, and chemicals,” Owen pointed out.

He added, “Currently,  index data suggests that companies are choosing to absorb additional costs rather than pass them on to consumers, but this is unlikely to last indefinitely,” he adds.

The employment sub-index has returned to growth areas, reaching 50.7 in May from 49.9 in April, falling below 50 for the first time since May 2021, but Reuters said the decline was marginal.

Although employment growth also remains at a marginal rate, this is the fastest pace of job creation since October.