Key Points
- 01UAE non-oil PMI stood at 54.8 in October, signaling solid expansion
- 02Firms raised selling prices at the fastest rate since the survey began in 2009
- 03Input costs reached their highest level since June 2022 on pricier fuel and freight
- 04Employment dipped slightly for a third time in five months as firms managed costs
Non-oil sector growth holds firm in October
The United Arab Emirates’ non-oil private sector continued to expand strongly in October, even as businesses faced mounting cost pressures. The seasonally adjusted S&P Global UAE Purchasing Managers’ Index (PMI) eased to 54.8 in October from 55.3 in September, remaining well above the 50 level that separates growth from contraction.
Output growth stayed robust, easing only marginally from a seven-month high recorded in September. Firms reported gains across construction, retail, tourism, and manufacturing, pointing to broad-based strength in non-oil activity despite rising costs.
Record increase in selling prices
Companies in the UAE’s non-oil economy raised selling prices in October at the fastest rate since the PMI survey began in August 2009. This marked a record pace of output price inflation, reflecting efforts by firms to pass higher costs on to customers.
Input cost inflation accelerated to its highest level since June 2022, driven mainly by more expensive raw materials, fuel, energy, and freight. The combination of rising input prices and record selling charge increases underscored intensifying inflationary pressures within the private sector.
Demand, new orders, and exports strengthen
Despite cost pressures, demand conditions improved, with new orders rising at a faster rate than in September. Firms cited success in attracting new clients as well as securing repeat business, which supported continued growth in activity.
New export work also increased, registering its quickest rise in two years. The acceleration in external demand complemented domestic orders, helping sustain overall expansion in the non-oil economy even as price pressures mounted.
Employment, capacity, and backlogs
Employment in the non-oil private sector dipped fractionally in October, the third decline in five months. Some firms reduced headcounts as part of efforts to control rising costs, indicating a cautious approach to staffing in the face of higher expenses.
Backlogs of work rose again, although the pace of accumulation was the softest in three months. The increase in outstanding business alongside slightly lower staffing levels suggested that capacity remained under some pressure as firms managed both strong demand and higher input costs.
Balancing growth with cost pressures
Overall, the October PMI results indicate that the UAE’s non-oil private sector is managing to balance solid growth with significant cost challenges. Activity, new orders, and exports are still expanding, but firms are coping with the steepest recorded increases in selling prices and the highest input cost inflation since mid-2022.
The combination of strong demand, rising backlogs, and cautious hiring points to an economy that is still gaining momentum while adjusting to more expensive inputs. How businesses continue to manage pricing, costs, and capacity will shape the non-oil sector’s performance in the coming months.
Key Takeaways
- 01The UAE’s non-oil economy is still expanding solidly, but the latest PMI shows that growth now coexists with historically strong price pressures.
- 02Record increases in selling prices and the sharpest input cost rises since mid-2022 indicate firms are passing higher costs through the supply chain.
- 03Slightly lower employment alongside rising backlogs suggests companies are controlling labor costs while demand and workloads remain firm.