A survey revealed that in May, non-oil business activity in the United Arab Emirates continued to be supported by new business activity fueled primarily by domestic demand, although the rate of expansion slowed from the previous month.
In May, the seasonally adjusted S&P Global UAE Purchasing Managers’ Index decreased to 55.5 from 56.6 in April, but remained above its long-term average.
The sub-index for New Orders decreased to 58.3 in May from 59.9 in April, but it continues to indicate a rapid increase in new business, led by domestic orders as export sales remained largely unchanged.
May non-oil UAE business activity driven by New orders
“Despite slipping from April’s six-month high, the latest headline reading of 55.5 indicated a robust improvement in business conditions,” said David Owen, senior economist at S&P Global Market Intelligence.
In addition, firms’ optimism for the coming year was bolstered by an increase in new hires and a rise in demand conditions.
The output sub-index reached 62.3 in May, indicating the rapid expansion of non-oil business activity, despite a minor deceleration from April’s reading of 62.7, while employment growth accelerated from the previous month.
The United Arab Emirates began implementing a 9% business tax on June 1, with exemptions for the numerous free zones that drive its economy, as the oil producer seeks to increase non-oil revenue and maintain its regional commercial status.
In spite of this, surveyed businesses are extremely optimistic about their future activity over the next 12 months.