Economy

New business in UAE increases at pre-Covid levels

October 4, 2023, 9:06 AM

Positive September PMI report
Non-oil orders up
First rise in three months

New orders for non-oil businesses in the UAE increased beyond pre-pandemic levels in September.

The seasonally adjusted S&P Global Purchasing Managers’ Index (PMI), which measures operating conditions in the non-oil private sector, registered 56.7, rising from 55.0 in August.

The index remains well above the 50.0 mark that separates economic growth from contraction.

The increase, the first for three months, was driven by the new orders sub-index, which climbed over seven points to its highest level since June 2019.

The survey revealed that almost 38 percent of participants noted a monthly rise. Eight percent suffered a fall.

“Where new orders grew, a number of businesses noted having more clients, which some in turn linked to stronger economic conditions and lower prices amid competitive pressures,” the survey said.

The output sub-index showed continued expansion in activity, rising to 62.8 in September from 61.9 in August, driven by the new orders as well as ongoing projects and new marketing.

New orders from foreign clients rose at the sharpest rate in over four years.

“Backlogs of work rose at the softest rate in over two years, while both inventory and staff growth slowed, indicating that firms had sufficient capacity to deal with the influx of new orders,” David Owen, senior economist at S&P Global Market Intelligence, said.

Earlier this year it was revealed that businesses in Dubai were turning to discounting in order to maintain high sales in a competitive market.

However, the September report for the entire UAE revealed that although selling prices continued to fall, discounting was “only modest”.

The UAE’s non-oil GDP hit AED312 billion ($85 billion) in the first quarter of 2023, increasing 4.5 percent year on year, Abdulla bin Touq, minister of economy, said last month, quoting preliminary estimates from the Federal Centre for Competitiveness and Statistics.

The Gulf state’s overall economy grew 3.8 percent to AED418.3 billion in Q1.