(Reuters) -Growth in the United Arab Emirates’ non-oil business sector slowed to its weakest pace in more than four years in July, as geopolitical tensions weighed on demand, a survey showed on Tuesday.
The seasonally adjusted S&P Global UAE Purchasing Managers’ Index (PMI) fell to 52.9 in July from 53.5 in June, marking its lowest level since June 2021. While still above the 50.0 mark that indicates growth, the rate of expansion was softer than the survey’s long-run trend.
“New order volumes helped firms to expand, but this trend is declining, with the latest data indicating the softest rise in incoming new work in almost four years,” said David Owen, Senior Economist at S&P Global Market Intelligence. “Should regional tensions ease, we may see a recovery in sales growth in the coming months.”
The slowdown was largely driven by hesitancy among clients to commit to new spending due to geopolitical tensions in the region, alongside weaker tourism activity and trade disruptions. New orders increased, but at the slowest pace since mid-2021.
Despite the slowdown in demand, output continued to expand sharply as firms sought to prevent backlogs from rising further. However, employment growth eased, marking the weakest uplift in four months, as companies faced challenges in completing work on time.
Input cost pressures accelerated slightly, prompting businesses to raise their selling charges, although the increase was mild. Optimism for future activity remained, driven by hopes of strengthening demand levels, though confidence eased slightly amid global economic uncertainty and heightened competition.
Dubai’s non-oil sector showed a solid recovery, with its PMI rising to 53.5 in July from 51.8 in June, driven by a sharper improvement in sales volumes.
(Reporting by Reuters)
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