Expo boosts UAE non-oil private sector growth to fastest since June 2019 -PMI

DUBAI (Reuters) – The United Arab Emirates’ non-oil private sector expanded at the fastest pace since June 2019 in October, recording its 11th straight month of growth as the Expo world fair began in commercial hub Dubai, a survey showed on Wednesday.

The seasonally adjusted IHS Markit UAE Purchasing Managers’ Index (PMI), leapt to 55.7 in October from 53.3 in September on the back of higher spending and tourism.

It was above the 50.0 mark that separates expansion from contraction and the first reading since the start of the pandemic that was above the series average, now at 54.1.

“The Expo 2020 finally began in the UAE at the start of October and brought a highly welcome upsurge in growth across the non-oil private sector,” said David Owen, economist at survey compiler IHS Markit. Expo was delayed for a year due to the COVID-19 pandemic.

The output sub-index rose to 61.1 in October from 57.1 in September while new orders also rose markedly compared to September’s reading.

“The increases in both output and new business were sharp and the most marked since July 2019. In addition, the boost to sales led more companies to predict a rise in activity over the next 12 months, as optimism jumped to the highest level since the beginning of the pandemic,” Owen said.

Business capacity in the non-oil sector was under renewed pressure due to rising new orders, leading to a fourth consecutive month of growing backlogs of work, albeit expanding at a marginally softer pace than in September.

Growth in the employment sub-index was slight and only a notch higher than in September, remaining below the series average.

“The key test for the UAE economy will be whether this initial uplift in demand from the Expo can be sustained over the coming months. We also wait to see whether this will strengthen employment growth, as latest data showed a subdued rate of hiring despite growing pressure on business capacity,” Owen said.

(Reporting by Yousef Saba; Editing by Catherine Evans)

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