New business led to gains in production and employment

Indicator: The private sector in the UAE maintains strong growth in September

Forecasts for production over the next 12 months rose significantly in September.


Yesterday's survey showed that the UAE's non-oil private sector maintained strong growth in September, albeit at a slightly slower pace than in August, as new business led to gains in production and employment.

The UAE's S&P Global Purchasing Managers' Index fell from the seasonal average to 56.1 in September, from 56.7 in August, which was its highest level in 38 months and remained above the series average since 2009. The adult is 54.2.

"Despite the slight decline in the index, it was nonetheless indicative of another strong pace of improvement in the non-oil economy," said David Owen, an economist at Standard & Poor's Global Market Intelligence, which conducted the survey.

He added, "At a time when the risks of a global recession are increasing, these results indicate that local companies are completely spared the economic storms in other regions, aided by higher-than-prevalent growth rates in production and new business as the country continues to recover from the pandemic."

The production sub-index, which measures business activity, fell to 61.7 in September, from 64.5 in August, which was its highest level since June 2019, and the series average is 57.6.

The sub-employment index eased slightly to 51.4 in September, from 51.5 in August, which was the strongest reading for the index since August 2021. The index in September was just below the series average of 51.3.

"Reducing price pressures is also helping to spur growth, as September data points to another month in which inflation stopped rising rapidly since the first half of the year," Owen said.

He added, “Despite the rise in input costs (after their decline in August), they only rose slightly, as the downward movements of a wide range of commodity prices helped relieve the burden on companies' purchasing budgets.

Consequently, purchases of inputs increased at the fastest rate in more than three years, helping to boost inventories, and supporting both higher new orders, and stronger production expectations for the next 12 months.”

Forecasts for production over the next 12 months rose sharply in September to the highest reading for the sub-index since June.

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