UAE’s private sector performance jumps to four-year high

The UAE Purchasing Managers’ Index (PMI) rose to a four-year high in October to 57.7 points, driven by a recovery in the non-oil sector, a sharp rise in business and new orders, and improved operating conditions.

“The non-oil economy in the UAE saw a stronger increase in new purchase orders in October, leading to the largest improvement in business conditions since mid-2019, while confidence in the next 12-month outlook remained high at the same time,” according to the results of the Standard & Poor’s Global Purchasing Managers’ Index study.

The UAE’s main PMI, a seasonally adjusted composite index prepared to provide an accurate overview of operating conditions in the non-oil private sector economy, rose from 56.7 points in September to 57.7 points in October, the highest since June 2019, indicating a strong improvement in the conditions of the sector.

The index’s rise was partly driven by its largest sub-component, the New Orders Index, which in October also recorded its strongest reading since June 2019 and a noticeably higher overall new business volume, with the companies surveyed highlighting improved demand conditions, attracting new customers, and increasing project business.

According to the study, the rise has been strong both domestically and externally, with new foreign applications also growing at the fastest rate in more than four years.

The dramatic rise in the volume of new businesses led to a strong increase in activity in the non-oil sector in October, while the rate of expansion rose slightly to its strongest level since June, underpinned by continued high employment levels and clearing the backlog.

After falling to a 14-month low in September, inventory growth saw a marked improvement at the beginning of the fourth quarter, and companies sharply increased their purchases of production supplies in response to increased customer demand as well as efforts to increase inventory with strong sales forecasts.

Inventory and employment growth helped improve productive capacity levels in October, helping companies cut back on backlogs, and despite demand pressures, backlogs fell for the first time since June 2021.

At the same time, the latest round of data indicated an acceleration of price pressures in the non-oil economy.