UAE's non-oil business activity contracts in November over weak demand: PMI

The UAE non-oil private sector economy suffered a further deterioration in business conditions during November, latest PMI data showed, in part caused by the first decline in activity since May.

The seasonally adjusted IHS Markit UAE Purchasing Managers' Index (PMI), which covers manufacturing and services, stood at 49.5 in November, unchanged from October and staying below the 50.0 mark that separates growth from contraction.

David Owen, Economist at IHS Markit, said: “Notably, the latest data signalled a renewed decline in output across the non-oil economy in the UAE during November. The sector continued to suffer from weak demand which, despite a partial recovery, is reportedly still much softer than prior to the COVID-19 pandemic.”

The October reading signalled that the UAE non-oil economy is struggling to maintain a robust recovery from the COVID-19 lockdown earlier in the year.

Firms continued to struggle amid subdued market conditions and lower customer numbers than seen prior to the coronavirus disease 2019 (COVID-19) pandemic. New orders grew during the month, but only slightly, whereas more positively employment fell at slowest rate since February, IHS Markit said.

At the same time, business confidence towards growth prospects worsened in November, with companies now predicting a fall in output for the first time in the series history, the report said.

Firms highlighted that the recovery in activity after the COVID-19 lockdown had stalled as demand conditions remained subdued and concerns about a renewed increase in virus cases intensified.

With cases also rising in the UAE, firms gave a pessimistic outlook towards business activity over the coming year in November. It marked the first time in the over eight-and-a-half-year series history where a downturn in output was predicted, largely due to worries about the pandemic’s impact on the economy.

Meanwhile, private sector employment dropped again in November, extending the run of decline seen since January, IHS Markit said.

However, the fall softened and was the least marked in nine months, as some surveyed firms recalled previously-employed staff.

"With the economy struggling to revive, job numbers once again declined, while businesses gave a negative outlook for the year ahead for the first time since sentiment data were first collected in April 2012," Owen said.





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