A.SREENIVASA REDDY (ABU DHABI)

The non-oil private sector of the UAE’s economy is firmly in expansionary mode in September with with the seasonally-adjusted S&P Global UAE Purchasing Managers’ Index (PMI) reaching 53.8, a slight dip from 54.2 in August.

The PMI is a survey-based economic indicator that gives an insight into the prevailing business conditions. The PMI is calculated by surveying purchasing mangers from a variety of industries.

These managers provide information on several key areas including new orders, production levels, employment, delivery times, inventories and purchasing prices. All these responses are aggregated into a number based a weightage given to each factor.

A PMI above 50 indicates expansion while a reading below 50 indicates contraction. The PMI sends signals about the direction of the economy much before the other indicators such as GDP and employment rates. 

“Although well above the 50.0 mark separating growth from contraction, the index at 53.8 was at its second-lowest in three years, beating only July's reading of 53.7,” the S&P Global said.

“New business levels received by non-oil firms rose at a sharp pace during the latest survey period, helped by a solid increase in export sales and reports of strong local market conditions,” the S&P Global added. 

Despite indicating robust gains, rates of growth in activity and new business across the non-oil economy receded at the end of the third quarter, the S&P Global report said.

Tough competition could have hampered sales leading to deceleration of rate of expansion, the second weakest in a year-and-a-half, the S&P Global report noted.

“The survey data also suggested that firms opted to maximise revenues whilst sales are still strong, as output charges rose at the fastest rate for over six-and-a-half years, ” commented David Owen, Senior Economist at S&P Global Market Intelligence. “This was partly due to cost pressures remaining strong in September.”

Noting that the new input purchases increased sharply, the report said survey members signalled that these were swiftly utilised to complete existing work. The S&P Global cited some reports that customs duties had delayed input deliveries, leading to a much slower improvement in supplier performance than in August.

The backlogs of work reached a four-month high, the survey noted. “There was further evidence that non-oil businesses were overwhelmed by their sales pipelines in September, with a considerable rise in backlogs of work.”

On the price front, September data signalled a faster increase in average prices charged across the non-oil economy, marking the fifth consecutive month of inflation, the report said.

Input costs continue to be a drag across non-oil economy. “Companies noted greater price pressures from a range of sources including transportation, machinery, technology, petrol and labour, ” the S&P Global said.

Commenting on the latest PMI report, Vijay Valecha, Chief Investment Officer of Century Financial, said: “Businesses are facing significant market competition challenges, leading them to prioritise revenue maximisation by increasing selling prices at the fastest rate in nearly seven years.”

Noting that the rising input costs negatively impacted growth of new orders and forecasts for the rest of the year, Velecha said companies are reporting the slowest employment growth since the end of 2022.

However, he is hopeful that with the Federal Reserve initiating a rate-cutting cycle and the UAE following suit, the pressures on non-oil sector businesses may ease. “This could enable them to access debt at more favourable rates, helping to fund operations affected by rising costs.”

Dubai PMI


The Dubai PMI signalled a robust expansion in business conditions across the non-oil private sector in September, the PMI Survey report said. “Overall activity levels rose at the fastest pace in four months, despite a slower upturn in new business volumes.”



Non-oil businesses increased staffing and inventories to greater degrees than in August, the report said.

“Supplier performance also improved, though to a lesser extent amid reports of customs delays.”