Soaring domestic sales and consumer confidence accelerated the pace of growth of the UAE’s private business in July 2021, which in turn led to the fastest job creation in over two-and-a-half years. The pace of growth in UAE’s private business picked up further steam in July, reaching its strongest level in two years. An index designed to measure activity in the country’s non-oil economy signalled a strong improvement in business conditions.

The IHS Markit UAE Purchasing Managers’ Index (PMI) rose from 52.2 in June to 54.0 in July as demand continued to rebound from the Covid-19 pandemic.

There was a sharp rise in orders, which led to expansion in production while private companies hired new employees at the fastest rate since January 2019. July PMI data signalled an increase in employment, which the report’s contributing panellists linked to efforts to expand sales departments.

“UAE’s non-oil sector enjoyed a busy start to the third quarter of the year as firms saw the sharpest rise in new orders for two years amid soaring domestic sales and strengthening market confidence. Output rose in line with this expansion, but was not enough to cover outstanding business which increased to the greatest extent for 16 months,” said David Owen, Economist at IHS Markit.

“The PMI was broadly at its long-run level to suggest the economy was largely back to normal growth,” he added.

UAE firms also expanded their purchasing activity in July after a slight decrease in June even as supply chain problems have worsened. Delivery times from Asia have lengthened due to a rise in the number of Covid cases in countries that are production hubs. Delays in shipments from Asia led to a quicker rise in input costs.

Output, meanwhile, expanded at a much faster rate than in June, which firms related to higher demand, project work and the rollout of new products and services. Despite this, sharp growth in new orders and input delivery delays led to a renewed increase in backlogs of work.

The outlook for future non-oil activity remained positive in July. Firms often hoped that the easing of Covid-19 restrictions and the Expo 2020 later this year would help to improve economic conditions.