UAE private sector is on a climb

Based on the United Arab Emirates (UAE) Purchasing Manager Index (PMI) the country’s private sector is successfully maintaining its progress even though the price of oil has soared downwards during the last few months.

During the previous month, the PMI results revealed that the UAE’s non-oil based private sector grew in terms of business activity.  The PMI’s data comprises of an amalgamated index on the UAE’s non-oil based economy, which was calculated based on the data gathered from about 400 privately owned companies throughout the emirates.

During December 2014, production growth increased in comparison to the previous month, to a level, which up until now has never been reached before. The production growth was strengthened by the boost in new orders. Simultaneously, job openings continuously opened and workers were employed, marking an increase in employment rate.

Throughout December, the PMI index was well above normal, reaching 58.4, which when compared to November 2014 calculation at 58.3%, not much had changed. However, the slight increase still reveals that the UAE’s private non-oil based sector is steadily improving and growing.

Ever since February 2010, the UAE’s non-oil based private sector production has been steadily growing. The continuous growth was maintained all through December as well, marking a significant increase, which was attributed to the fact new business inflow from the domestic and international markets.

During the last four months, export orders continuously increased, reaching a climax in December. The increase in export orders may possibly be attributed to the fact that demand on an international level has increased because the UAE has succeeded in drawing in new international customers as well as maintaining its healthy market. The PMI data also revealed that consumption soared drastically during December 2014.

According to expert financial advisors, it is anticipated that the decreased oil prices will influence the UAE within 2015, but for the time being demand is maintained at a satisfactory level. The fact that orders and production output are on the increase is a reassuring and supporting sign.

Due to growth in output production and new increased orders, UAE companies hired additional workers to meet demand. In spite of the fact that growth has marked a tiny fall when compared to December, patrol statistics have revealed a sharp increase, which is quite impressive when comparing to past data.

UAE private sector companies have been facing pressure in terms of cost and expenses. Generally, inflation concerning input goods prices rose during December, which was accompanied by a soaring increase in purchasing costs and low-income growth. On the bright side, output costs declined in December due to the declining rate of inflation in contrast to December. 

UAE private sector companies anticipate that during the future their orders, purchases and stocks will mark further increases. The most recent PMI data reveal that the UAE’s non-oil based private sector is strong, showing that declining oil prices will not influence the business operations of the non-oil sector. 

Experts insist that the UAE is completely capable of facing any problems that may arise due to the plunging of oil prices because of its diverse economy and strong buffers. The UAE shines amongst the other GCC countries as it has the potential and tools to manage its economy if prices of oil continue to surge downwards.

The continuous efforts of the UAE government to develop its non-oil sectors has paid off since in 2013 the non-oil sector contributed 61.1% of the nation’s total GDP and continues to grow fundamentally. In 2000, the non-oil sector contributed to 44.7% of the UAE’s total GDP.

The UAE does not solely depend on oil-based businesses for revenues as its non-oil based economy has marked continuous growth over the years, which is especially evident in its increased inflow of investments as well as a significant growth in non-oil related goods and services export activity.