The Purchasing Managers’ Index (PMI) for the non-oil private sector in the UAE rose to 56.7 in September, indicating a robust and accelerated expansion. The increase was primarily driven by a significant upturn in new orders, reaching its highest level since June 2019. This surge in demand was attributed to new client acquisitions, competitive pricing, and a robust underlying economic environment.
The report also highlighted a notable increase in output, accompanied by a surge in confidence levels. While input buying growth led to higher costs, expansions in inventories and employment softened. Firms cited that previous hiring and inventory growth had sufficiently boosted capacity, resulting in the weakest rise in backlogs of work in over two years.
David Owen, Senior Economist at S&P Global Market Intelligence, noted that the UAE PMI’s upturn was driven by a much sharper rise in new work intakes compared to the previous month. Both domestic and foreign markets contributed to the demand strength. New orders from foreign clients saw the sharpest increase in just over four years. Despite overall selling prices falling, some firms raised charges due to rising input costs.
While output growth picked up slightly, it remained behind the surge in new orders. This suggested that businesses didn’t feel the need to boost activity to such an extent. The report also highlighted improvements in supply chains, with delivery times shortening to the greatest extent since July 2019.
On the cost side, increased raw material prices led to solid rises in purchasing and overall costs. Price discounting continued, albeit modestly, indicating that competition was influencing pricing strategies.
