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UAE non-oil business surges to four-year high

By Gavin Gibbon
Khalifa Port in Abu Dhabi. There is confidence that non-oil business will continue to grow, says S&P Wam
Khalifa Port in Abu Dhabi. The emirate reported 2.8% growth in real GDP over the first nine months of 2023 year on year

Non-oil business activity in the UAE grew at the fastest pace in four years in October, spurred by a surge in new orders, according to a new survey published on Friday.

The latest S&P Global UAE Purchasing Managers’ Index (PMI) increased to 57.7 last month, from 56.7 in September, its highest level since June 2019. Any figure above 50 represents economic growth.

The new orders index posted its strongest reading since June 2019, fuelled by strong demand, new clients and more project work.

The upturn was strong both domestically and overseas, with foreign new orders also growing at the fastest rate for more than four years.

“High business confidence levels suggest that companies do not expect this momentum to lose steam, as predictions for the year ahead were the second-strongest since March 2020,” said David Owen, senior economist at S&P Global Market Intelligence.

Inventory and staffing growth underpinned improved capacity levels in October, helping companies to make a renewed cut to backlog volumes. 

“Despite demand pressures and reports of administrative delays, outstanding work decreased for the first time since June 2021,” the report said.

Overall input costs rose at the fastest rate since July 2022 driven up by rising fuel and raw material prices, while the greater cost of living and efforts to retain staff contributed to a modest rise in wages.

“There were some indications that inflationary pressures are picking up and starting to influence company’s pricing strategies,” Owen cautioned.

The UAE’s non-oil sector grew by 5.9 percent in the first six months of the year.

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