The “Purchasing Managers” index attributed it to “Expo 2020” and the easing of travel restrictions
Significant expansion of new business in the UAE and production levels to the fastest pace in two and a half years
Production prices fell for the fifth consecutive month in December.
archival
The PMI data for the month of December 2021 came to a strong end for the non-oil UAE economy, with growth continuing at a noticeable pace throughout the fourth quarter of last year, with the start of the “Expo 2020” exhibition, and the easing of travel restrictions.
The latest study indicated a significant expansion of new business, while production levels rose at the fastest pace in nearly two and a half years.
Firms also reported a stronger rise in cost pressures that were often associated with higher energy and fuel prices.
Total purchase costs rose at the highest rate since March, often resulting in companies reluctance to purchase additional inputs.
The IHS Markit index of (purchasing managers) in the UAE, after adjusting for seasonal factors, which is a composite index prepared to provide an accurate overview of operating conditions in the non-oil private sector economy, recorded a slight decrease from the level of November. Highest in 29 months (55.9 points), to 55.6 points in December.
As was the case throughout the last quarter of the year, the indicator indicated a strong improvement in business conditions.
New orders continued to rise significantly in December, although the growth rate eased to a three-month low.
Increased travel due to Expo 2020 and strong customer demand were again cited as key drivers of sales growth.
New export orders also increased, although the rate of increase was slow and marginal.
The increase in new orders continued to support the noticeable expansion in the non-oil private sector activity in December.
Indeed, the recent recovery was the most notable since July 2019, with a quarter of participating firms seeing an increase in production since November.
The index stressed that despite this, companies continued to face problems in order to keep pace with demand, which led to an increase in the backlog for the sixth month in a row.
Labor force numbers also rose, albeit marginally, reflecting a further recovery in employment after a long period of decline.
While companies continued to enjoy strong levels of demand, they also reported a significant increase in input prices. This rise is largely due to higher fuel and energy costs, as well as higher raw material prices. The rate of increase in purchase costs was the fastest since March, and the second largest in the past three years.
He pointed out that inflationary pressures often led companies to limit their purchasing activity. Input purchases also rose at the slowest rate in five months, while inventory levels rose only marginally. This came despite further improvement in delivery times, which were the best since July 2020.
In contrast to rising input costs, production prices fell for the fifth consecutive month in December.
Discounts were often introduced in response to strong competition.
Looking ahead, business confidence in future activity fell to its lowest level in three months during December, and only 14% of participating companies gave a positive outlook.
While companies hope the strong growth trend will continue, some have highlighted the risks of tighter business and travel restrictions due to the Omicron wave.
«Expo 2020»
“The (PMI) remained close to its peak recorded last month, as it recorded 55.6 points in December, which indicates that the benefits that accrued to the economy from the exhibition (Expo 2020) and the easing of (Covid-19) measures remained strong throughout the last quarter of last year.
The volume of new business rose significantly, supporting the fastest rise in business activity in nearly two and a half years.”
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