Non-oil activity sees slowest growth in nearly four years in May: The UAE’s non-oil activity expanded at the slowest pace since September 2021, as “global economic uncertainty linked to US tariffs [...] negatively affected output,” according to the S&P Global UAE PMI (pdf). The headline figure came in at 53.3 in May, down from 54.0 in April.

REMEMBER- The all-important 50.0 mark is the threshold separating contraction from growth. Anything above 50 denotes expansion, while anything below indicates contraction.

New orders slowed, while employment ramped up: The new orders subindex fell to 56.2 in May, down from 56.9 in April, in what is the softest pace of new order growth in seven months, according to Reuters. However, the continued growth in new orders was attributed to “favourable demand conditions, good relationships with clients, new marketing strategies and diverse product ranges.” Meanwhile, employment grew at its strongest rate in a year, with rising new orders creating elevated workloads.

Output increased, but at a comparatively slower rate: The output sub index for output fell to 57.3 in May from 59.4 in April, in what is the lowest reading since September 2021. However, the expansion in output was still “sharp,” supported by demand conditions remaining strong throughout the month. The drop in output growth was partially attributed to “global

economic uncertainty,” following “a particularly robust sequence of growth.”

Input purchases saw a record decrease during the month, with companies looking to “streamline holdings amid slowing momentum.” Growth in backlogs also dropped to a 16-month low during the month. However, this came with a drop in input price inflation, which fell to its lowest since December 2023 due to “due to the modest increase in raw material prices and staffing costs,” NBK Senior Economist Issa Hijazeen told EnterpriseAM. Still, output prices increased for the fifth consecutive month. “The sharp cutback in stocks (which was the fastest on record) and the broadly subdued outlook for activity suggest that firms are gearing up for softer growth,” S&P Global’s David Owen said.

Business sentiment has slowed down: “Businesses gave a modest assessment of their activity prospects in May. Optimism eased to its lowest since January, with nearly 10% of companies anticipating an expansion in the year ahead,” the report reads.

MEANWHILE, IN DUBAI-

Business conditions in Dubai remained unchanged from the previous month, with the Dubai PMI remaining at 52.9 in May, in what is the emirate’s joint-lowest reading since the beginning of 2022. Still, businesses continued to receive increased levels of new orders, with the rate of growth ticking up to a four-month high on the back of “improved client confidence” coupled with “positive impacts from marketing strategies and competitive pricing.”

On the flipside, input purchases decreased for the first time this year, and job creation was mild during the month, according to the report.

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