UAE Non-Oil PMI Slips to 54.8 as Selling Prices Hit Record High and Export Orders Strengthen.
Dubai: The UAE’s non-oil private sector continued to expand strongly in October, but businesses raised selling prices at the fastest pace on record as operating costs climbed. The S&P Global UAE Purchasing Managers’ Index (PMI), released on November 4, highlights growing cost pressures even as demand remained resilient.
The headline PMI eased from September’s level but remained comfortably above the 50-point mark, indicating continued growth. David Owen, Principal Economist at S&P Global Market Intelligence, described the rise in selling prices as unprecedented, while noting that overall business activity continued to improve.
“The unprecedented rise reflected efforts to pass cost burdens on to customers, with firms feeling the impact of higher fuel prices and increased charges for critical materials. The findings point to greater inflationary risks for the UAE economy in Q4, especially in the light of successive increases in petrol and diesel prices,” he said.
Dubai PMI reaches an eight-month high
Dubai’s PMI edged up to an eight-month high of 54.6 in October, from 54.5 in September, signalling a strong improvement in business conditions among the emirate’s non-oil companies.
New business volumes increased at their joint-fastest pace since February. Companies expanded output but made modest reductions to staffing levels.
Dubai businesses also recorded a rise in selling prices, while overall cost pressures accelerated to their highest level since June 2022. Stockpiling, meanwhile, was less pronounced than in September.
Prices and demand climb
During October, companies faced higher costs for raw materials, fuel, energy, freight, maintenance, storage and rent. Many passed these increases on to customers to protect their margins.
Output growth eased only slightly from September’s seven-month high. Firms attributed the expansion to activity in construction, retail, tourism and manufacturing, although some reported constraints linked to regional conflict, competition and weaker discretionary spending.
New orders increased at a faster pace than in September, supported by new customers and repeat business. Overseas demand also contributed, with new export orders rising at their fastest rate in exactly two years.
Suppliers and stocks
Purchasing activity increased at its sharpest pace in nine months. However, stocks of inputs grew only marginally, recording their slowest increase since July as companies used materials quickly to fulfil orders.
Supplier delivery performance improved at its fastest pace since June. Businesses cited reliable domestic supplies and responsive vendors. The report also points to companies increasingly turning to local suppliers to manage disruptions to maritime routes.
Business confidence strengthens
Business expectations for activity over the next 12 months rose to their highest level since January. Companies cited positive demand forecasts and hopes for an improvement in regional conditions.
Owen said an improvement in regional conditions could provide further support to sectors such as tourism.
