Business conditions for the UAE’s non-oil private sector recorded the weakest improvement since August 2013 in June. The UAE Purchasing Managers’ Index (PMI) dropped to 54.7 in June from May’s recorded 56.4.

A score above 50 on the PMI indicates growth in overall activity, while a score below 50 indicates an overall decrease. This means that the UAE non-oil private sector generally still continued to grow in June. However, last month’s growth has been weak compared with the monthly performance recorded against the composite index over the past six years, in particular since August 2013, which previously held the lowest month-on-month growth record.

Khatija Haque, head of Mena Research at local bank Emirates NBD (ENBD), which sponsored the PMI, attributes some of the slowdown in the June data to the start of Ramadan. The third quarter performance remains uncertain, making it difficult to predict whether growth momentum will recover later in the year.

The PMI is a composite indicator that aims to give an accurate overview of operating conditions in the non-oil private sector of the UAE economy. It is the cumulative score across five individual indexes which are weighted accordingly:

• New orders (0.3)
• Output (0.25)
• Employment (0.25)
• Suppliers’ delivery times (0.15)
• Stock of items purchased (0.1)

The deceleration in June is primarily attributed to weaker growth in output and new business, despite a solid growth in employment. The PMI is based on data input from purchasing executives in 400 private sector companies that represent the economic structure of the UAE non-oil sector, including manufacturing, services, construction and retail.