The IHS Markit Purchasing Managers’ Index (PMI) came in at 53.8 in August, down from July's 54.0. Consequently, the index remained above the 50-threshold, but pointed to a moderating improvement in business conditions from the previous month. Despite this, the reading was still at levels not seen since the summer of 2019.
Business activity remained red-hot, with output rising at the fastest rate since July 2019 amid an improvement in demand as Covid-19 restrictions were lifted. New orders also registered a sharp increase, albeit more softly than with the rise recorded in July. Staffing levels rose substantially, at a pace not seen since January 2018. Despite the favorable reading, uncertainty regarding the course of the pandemic continued to negatively color firms’ confidence about the future economic outlook, notwithstanding the upcoming Expo 2020. Meanwhile, rising backlogs and elevated input prices pointed towards continuing supply-chain disruptions.
FocusEconomics panelists see non-oil GDP expanding 3.4% in 2021, which is down 0.2 percentage points from last month’s forecast, and 3.5% in 2022.