PMI Indicates Capacity Constraints Impacting Output
Slower Non-Oil Business Activity in UAE
Capacity constraints affected non-oil business activity in the United Arab Emirates (UAE) in May, with output growth hitting its slowest pace in 16 months, according to a survey released on Wednesday.
The seasonally-adjusted S&P Global UAE Purchasing Managers’ Index (PMI) remained at 55.3 in May, consistent with April’s reading, which was the lowest since August of the previous year.
The output sub-index decreased to 60.8 in May from 63.2 in April, marking the slowest expansion rate since January 2023.
While new sales growth improved in May, with the sub-index for new orders rising to 58.7 from 56.0 in April, this increase was still the second weakest since August last year.
Although demand picked up following April’s unprecedented floods, some respondents noted that sales volumes were slow to recover. Additionally, backlogs of work increased at the fastest rate since the survey began in 2009 due to capacity constraints.
“Firms have a lot of work to do to manage their workloads, including rebuilding output levels, hiring workers, and boosting inventories,” said David Owen, senior economist at S&P Global Market Intelligence.
Positive Outlook Despite Slower Growth
“Despite the slower growth in activity, demand remains strong, and firms should be well-positioned to resume robust growth once capacity is restored,” he added.
Even with the slowdown in activity growth, respondents remained optimistic about future output, supported by stabilizing economic conditions and higher sales.
