UAE Non-Oil PMI Eases to 54.8 as Price Rises Hit Record Pace
Output, exports and purchasing stayed strong in October, but input costs climbed at their fastest rate since mid-2022 and firms passed them on.
The UAE's non-oil private sector kept expanding in October, but at a slower rate. The seasonally adjusted Purchasing Managers' Index eased to 54.8 from 55.3 in September, holding above the 50 line that divides growth from contraction.
Activity, new orders and purchasing inventories supported the reading. Output growth cooled slightly from September's seven-month high, with firms reporting stronger business in construction, retail, tourism and manufacturing.
New orders picked up on new customers and repeat business. Export demand rose at its fastest pace in two years, purchasing grew at the quickest rate in nine months, and supplier delivery times improved as firms shifted to domestic vendors to avoid maritime shipping disruption.
Input cost inflation hit its highest level since June 2022. Raw materials, fuel, energy, freight, maintenance, storage and rent all pushed expenses higher. Firms responded by raising selling prices at the fastest pace since the survey began in August 2009.
David Owen, principal economist at S&P Global Market Intelligence, said companies were passing higher operating costs on to customers, a pass-through that signalled rising inflationary risk in the fourth quarter.
Employment fell marginally for the third time in five months, as some companies trimmed staff to control expenses. Outstanding workloads built up because new orders exceeded the capacity to finish existing projects.
Business confidence climbed to its highest level since January, helped by stronger demand expectations and hopes of improving regional conditions.
Dubai's PMI rose to 54.6 from 54.5, an eight-month high. New business growth there was the joint-fastest since February, and companies lifted output despite modest workforce reductions. Selling prices in the emirate rose at a record pace.
Hiring is the weak spot in an otherwise steady expansion. Backlogs are growing while payrolls shrink, which leaves output dependent on productivity gains and could limit how much of the new demand firms can capture.
