The Emirates NDB Purchasing Managers’ Index (PMI) increased from 57.0 in November to 57.7 in December. As a result, the index moved further above the 50-point threshold that separates expansion from contraction in the non-oil producing private sector, and marked the highest reading in 34 months.
December’s figure was underpinned by an acceleration in new order growth, with new export orders returning to expansion after November’s contraction. Anecdotal evidence suggested that fellow GCC countries were an important source of new foreign business in the month. Output also increased sharply, albeit at a slightly slower rate than in the prior month. As a result of strong economic activity, firms continued to take on staff, although employment and wage growth remained mild overall. On the price front, input prices fell in December, while output prices declined.
According to Khatija Haque, Head of MENA Research at Emirates NBD: “It is likely that the introduction of VAT in January has spurred activity and purchasing in Q4 2017, which is in line with our expectations. Nevertheless, employment and wage growth has been relatively muted, not just in December but for 2017 as a whole”.
FocusEconomics Consensus Forecast participants expect GDP to expand 2.9% in 2018 and 3.1% in 2019. Panelists expect fixed investment to increase 3.8% in 2018 and 4.3% in 2019.