Today's Edition
A. SREENIVASA REDDY (ABU DHABI)
The UAE’s non-oil private sector continued to improve markedly in September, with the seasonally adjusted S&P Global UAE Purchasing Managers’ Index remaining at a 20-month high of 55.3.
The index was unchanged from August and pointed to a marked monthly improvement in the health of the non-oil private sector.
The PMI is a key indicator of business conditions in the non-oil private sector. A reading above 50 signals an overall improvement from the previous month, while a reading below 50 indicates a deterioration.
S&P Global said demand conditions in the non-oil private sector continued to improve in September, boosting pricing power and enabling firms to raise their selling prices at the fastest pace in over 15 years in response to higher input costs.
As demand strengthened, business activity increased rapidly and higher output requirements encouraged firms to expand both purchasing activity and employment. Staffing numbers rose, though only modestly, while backlogged work accumulated again.
“A key driver of the latest improvement in business conditions was a rapid monthly rise in output, with the rate of growth quickening to the fastest since February, just prior to the outbreak of war in the region,” S&P Global said.
Increased activity was recorded across a range of sectors amid improving customer demand and healthy pipelines of new work, the report said, citing anecdotal evidence.
Strengthening demand also supported a further marked increase in new orders, although the pace of expansion eased from the seven-month high recorded in August. New business from abroad expanded for the third consecutive month and at the sharpest pace since November 2024.
Companies raised their output prices solidly as stronger demand gave them greater pricing power in September. “The rate of inflation was the steepest since May 2011 and among the fastest since the survey began,” the report said.
Employment increased only slightly despite strong growth in new orders, although the modest rise in staffing compared favourably with the fall recorded in August.
Purchasing activity increased rapidly in line with greater workloads, with firms reporting purchases of construction materials such as concrete and steel as well as electrical items. Stocks of inputs rose for a second consecutive month and at the fastest pace since November 2023.
Vendor performance also continued to improve amid better material availability and smoother logistics, with lead times shortening for the fourth consecutive month.
“The UAE PMI held at 55.3 in September, another indication that the non-oil economy has moved past the mid-year slowdown linked to the Middle East conflict. Businesses saw customer demand improve, not just in local markets but abroad as well, with new export business rising at the strongest rate in nearly two years,” David Owen, Principal Economist at S&P Global Market Intelligence, said.
“While the economic picture looks more robust now, selling charges also rose markedly, suggesting that firms are taking the opportunity to boost their margins following a period of strong input cost pressures,” Owen said.
He added that with oil markets remaining volatile and shipping routes still constrained, input costs and selling charges could remain elevated.
Dubai PMI
The Dubai PMI rose to 54.5 in September from 54.1 in August, signalling a solid improvement in business conditions. The health of the emirate’s non-oil private sector strengthened to the greatest extent in seven months.
“Central to the improvement in business conditions was a sharp and accelerated increase in output, one that was the fastest in the year-to-date. New orders also rose markedly, supported by the strongest expansion in new business from abroad for two years,” the report said.
A renewed rise in employment was registered in September, although backlogs of work continued to increase markedly.
Selling-price inflation in Dubai accelerated to its fastest pace since January 2014 as companies passed higher input costs on to customers.
