UAE non-oil sector grows steadily, regional tensions weigh on demand
The seasonally adjusted S&P Global UAE Purchasing Managers' Index (PMI) edged up to 53.5 in June from 53.3 in May, signalling continued growth in the sector, but new orders increased at their slowest pace in nearly four years.
The subindex for new orders fell to 54.5 in June from 56.2 in May, and was the lowest reading since September 2021. The slowdown was attributed to tensions between Israel and Iran, which dampened client demand.
David Owen, senior economist at S&P Global Market Intelligence said the impact of the conflict between Israel and Iran was mostly felt on the demand side, with some slowdown in orders.
"However, with firms instead able to turn their attention to addressing the substantial level of outstanding work...the impact on overall business conditions was negligible," Owen said.
Output growth accelerated as firms sought to reduce backlogs.
Supply chain challenges persisted, with delivery times improving at the slowest rate in 14 months, and input costs rose at the slowest pace in nearly two years.
UAE non-oil firms remained relatively subdued in their business outlook, the survey showed, even though the level of business confidence rose to its highest since November.
Dubai's headline PMI dropped to its lowest level in nearly four years in June to 51.8 from 52.9 the previous month, driven by a sharp slowdown in sales growth amid competitive pressures and weaker tourism. Despite this, business activity rose sharply, and workforce numbers increased for the third consecutive month.
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