UAE non-oil PMI eases to 54.8 as price pressures intensify

The UAE's non-oil PMI decreased to 54.8 in October from 55.3 in September, maintaining a position above the expansion threshold of 50. Geopolitical disruptions impacted business activity, but resilient demand and public investment sustained growth in the non-oil economy. RIYADH: The UAE's non-oil private sector continued expanding in October, with new orders picking up and businesses raising selling prices at a record pace to pass on higher operating costs. According to the latest S&P Global Purchasing Managers' Index, the Emirates' PMI stood at 54.8, down slightly from 55.3 in September, but well above the 50 mark, which signals expansion in the non-oil private sector. The data came as geopolitical disruptions weighed on business activity, although resilient demand and continued public investment helped keep the non-oil economy in expansion territory. In the wider region, Saudi Arabia also showed resilience in non-oil business activities, with the Kingdom registering a PMI of 54 in October, while Kuwait and Qatar recorded readings of 52.9 and 46.3, respectively. Reflecting on the UAE report, Principal Economist at S&P Global Market Intelligence David Owen said: 'Output prices across the UAE non-oil private sector rose at the fastest rate in the survey's history in October, as input cost inflation quickened to its highest since June 2022.' He added: '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.' Owen noted that these findings point to greater inflationary risks for the UAE economy in the fourth quarter, especially in light of successive increases in petrol and diesel prices. Output growth and future optimism Output growth remained strong at the start of the fourth quarter, easing only marginally from September's seven-month high. Firms surveyed linked higher activity to a range of sectors, including construction, retail, tourism and manufacturing, although some noted constraints arising from regional conflict, competition and lower discretionary spending. New orders rose at a sharper pace than in September, supported by both new clients and repeat business. Companies also reported a boost in foreign order inflows, with new export work rising at its fastest rate in exactly two years. S&P Global further said that employment fell fractionally in October, marking the third decline in the past five months. Some firms reduced headcounts to control costs, offsetting recruitment by other businesses responding to rising sales. Business optimism strengthened in October, with expectations for activity over the coming year rising to the highest level since January, driven by robust demand forecasts and hopes of improving regional conditions. Dubai PMI In the same report, S&P Global said Dubai's PMI rose to an eight-month high of 54.6 in October, from 54.5 in September. The report added that October's upturn was driven by a sharp rise in new business volumes, with the rate of growth matching the fastest recorded since February.