DUBAI, 3 February – Growth in the UAE’s non-oil private sector has slowed further, dropping to a one-year low in January as global economic conditions weaken, but local businesses remain “in good health”, according to a survey released on Friday.
The seasonally adjusted S&P Global UAE Purchasing Managers’ Index (PMI) fell for the third consecutive month to 54.1 in January from 54.2 in December. While it’s the lowest reading in one year, the UAE PMI continued to show “solid improvement” in business conditions at non-oil companies at the start of 2023.
The level of confidence in the sector also remained among the weakest in the series history. However, activity levels rose sharply in response to another marked increase in new orders, although the rate of activity growth was the “joint-slowest” for 16 months, said David Owen, senor economist at S&P Global Market Intelligence.
“The non-oil sector remains in good health and in particular compares positively against a global economic slowdown towards the end of 2022,” Owen said.
“That said, weak global conditions weighed on export demand in January, as firms saw foreign sales decrease at the fastest rate since June 2021.”
New orders, inflation
Respondents polled for the survey saw new order inflows picking up sharply last month, with the upturn rising to a three-month high, but export orders fell at the quickest rate since June 2021, as economic conditions impact demand.
There was also a lack of inflationary pressures across the non-oil private sector, as input prices remained “broadly stable” for the second consecutive month.
“Robust supply chains and the partial alleviation of energy and transport price pressures helped to keep costs steady,” S&P said.