UAE: The UAE’s non-oil private sector growth remained steady in May, with the country’s Purchasing Managers’ Index holding firm at 55.4, unchanged from the previous month, an economy tracker showed. 

According to an S&P Global report, non-oil companies in the Emirates experienced a record increase in outstanding business levels in May. Robust sales pipelines and the lingering impact of April’s flooding crisis significantly pressured business capacity. 

David Owen, senior economist at S&P Global Market Intelligence, said: “UAE non-oil companies continued to face relentless pressure on business capacity in May, as the latest PMI survey data signaled the largest-ever increase in backlogs of work.”   

He added: “Although the uplift can be partly blamed on the country’s record rainfall event in April and subsequent flooding, capacity pressures were already at historic levels in March amid robust sales pipelines and supply chain challenges due to the Red Sea crisis.”  

In March, the UAE’s PMI stood at 56.9, following 57.1 in February and 56.6 in January. 

S&P Global noted that any PMI reading above 50 indicates growth in the non-oil sector, while readings below 50 signal contraction. 

“The PMI was unchanged from April’s eight-month low of 55.3 in May. However, the reading was still above its long-run average of 54.4 and indicative of a robust improvement in operating conditions,” the report stated.  

The survey also highlighted increased input demand and the need to replenish stocks, leading to intensified price pressures in May. Input costs rose at the sharpest rate in nearly two years, prompting the fastest uptick in prices since April 2021. 

Additionally, the rate of business activity growth softened to a 16-month low, with some companies noting operational disruptions. 

“The findings suggest that firms have a lot of work to do to get on top of their workloads, including rebuilding output levels, hiring workers and boosting inventories. May data signals that hiring and purchasing efforts did pick up, though with the added effect of contributing to higher inflationary pressures,” said Owen.  

He further highlighted that output growth dropped to a 16-month low in May, with some firms reporting that their operations were still on hold. 

The report noted that non-oil companies increased their labor force over the month, with the rate of job creation rising to a three-month high.  

Similarly, purchasing growth also strengthened, reaching its highest level since last November amid robust sales pipelines and output requirements. 

“As such, the focus for the next few months looks to be the recovery of the sector from this crisis. Nonetheless, with demand still strong, firms should be in a good position to resume their robust growth once capacity has been restored,” added Owen.