UAE Non-Oil Firms Raise Prices at Record Pace as October PMI Stays Strong

The headline PMI eased to 54.8 from 55.3 in September, Khaleej Times reported. That still points to a solid improvement in conditions in the non-oil private sector, since any reading above 50 indicates growth. Reuters also reported the record pace of price increases.

Output prices rose at the sharpest rate since the survey began in August 2009, and input cost inflation reached its fastest since June 2022. Companies reported paying more for raw materials, fuel, energy, freight, maintenance, storage and rent.

"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," said David Owen, principal economist at S&P Global Market Intelligence. He said the findings point to greater inflation risks for the UAE economy in the fourth quarter, made worse by repeated increases in petrol and diesel prices.

Demand Holds Up

New orders grew faster than in September, helped by both new and repeat customers. New export business rose at its quickest pace in exactly two years. Output growth stayed strong, easing only slightly from September's seven-month high. Firms credited construction, retail, tourism and manufacturing, although some said regional conflict, competition and weaker discretionary spending were holding them back.

Employment edged down for the third time in five months, as some companies cut staff to control costs while others hired to meet higher sales. Backlogs of work rose sharply again, although at the slowest pace in three months. Owen said firms appeared reluctant to hire while costs were high and were focused on protecting margins while sales recover.

Business optimism about the year ahead reached its highest level since January. Firms cited strong demand forecasts and hopes that regional conditions will improve, especially for sectors such as tourism. Purchasing activity grew at its fastest pace in nine months.

Supply chains also improved. Supplier delivery times got better by the most since June, and the survey said domestic non-oil firms were continuing to switch to local suppliers to work around disrupted shipping routes.

Dubai at an Eight-Month High

The Dubai PMI rose to an eight-month high of 54.6 from 54.5 in September. New business in the emirate grew at a rate matching the fastest since February, and Dubai firms also reported a record increase in selling prices. Cost pressures there were the strongest since June 2022.

For executives, the survey shows an economy where demand is recovering but margins are tight. Companies are protecting profitability through price rises rather than hiring, which is likely to keep inflation in focus for policymakers and customers through the end of the year.