Stronger customer demand fuels growth in UAE's non-oil sector
Business
Similar trend witnessed in Saudi Arabia where tourism and construction bolstered the economy
DUBAI (Reuters) – Business activity in the United Arab Emirates' non-oil sector expanded in June as new orders rose at the fastest pace in four years, according to a survey published on Wednesday.
The seasonally adjusted S&P Global UAE Purchasing Managers' Index rose to 56.9 in June, from 55.5 in May, and remained firmly above the 50 mark, which signals growth in activity.
The sub-index for new orders jumped to 61.0, the fastest rate of expansion since June 2019, fuelled by stronger customer demand, in part due to competitive pricing and promotional offers.
"Some of this growth was predicated on the offer of discounts to customers, however, which may not be sustainable in the long-term given that input costs are rising," said Andrew Harker, economics director at S&P Global Market Intelligence.
"All in all, the non-oil private sector remained on a strong footing at the midway point of the year, and is well placed for further growth in H2," Harker said.
The output sub-index rose to 64.1 after dipping to 62.3 in May, but overall input prices also increased sharply, rising to 52.1 in June, the highest pace of increase since July 2022.
While there was broad optimism among non-oil companies for the outlook in the next 12 months, sentiment in June dipped from the previous month, and remained below the series average.
Earlier, it was reported that non-oil business activity in Saudi Arabia surged in June, supported by strength in construction and tourism.
Read more: Tourism, construction boost Saudi Arabia's non-oil sector in June: PMI
The development comes as the Saudi government is pouring billions of dollars into developing non-oil sectors of the economy to diversify revenue sources away from hydrocarbons.
