The UAE’s non-oil economy continued to show strong growth rates in November with favorable demand conditions and competitive client pricing supporting a faster increase in new business. However, slower job creation and limited efforts to store extra inputs led capacity pressures at non-oil firms to remain high last month. Meanwhile, businesses cut charges again despite a solid increase in costs.
The seasonally adjusted S&P Global UAE Purchasing Managers’ Index (PMI) registered 54.2 in November, up slightly from 54.1 in October, indicating a robust improvement in the health of the non-oil economy.
The Dubai PMI climbed to 53.9 in November, up from 53.2 in October but slightly below the UAE’s 54.2.
Businesses report stronger sales
The UAE’s non-oil economy witnessed a sharp expansion in total business activity last month. Despite softening from the previous month, the pace of output growth was slightly quicker than the historical trend, with nearly a quarter of survey respondents reporting an expansion in activity since October.
The rise in new orders last month was the sharpest since August. Qualitative evidence from businesses showed that successful client wins, new marketing initiatives and price discounts supported sales.
“The UAE PMI was consistent with a solid rate of growth across the non-oil private sector in November. Businesses continued to see a marked upturn in sales, which spurred activity forward but also greatly added to outstanding work,” stated David Owen, senior economist at S&P Global Market Intelligence.
Employment rises marginally
Despite the expansion in the UAE’s non-oil economy, data continued to signal slow growth in the non-oil sector’s jobs market. Employment rose only fractionally and to the least extent for 31 months, with nearly all panelists reporting no change in their staffing. This came despite another substantial rise in backlogs of work, as growing order book volumes often led to delays in the completion of orders. Nearly a fifth of surveyed firms reported an expansion in pending workloads since October.
“The survey data indicated that firms did little to try and rectify these capacity pressures. Employment growth slipped to a 31-month low, while input purchases rose at the slowest pace since July 2023,” added Owen.
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Price pressures ease
The rate of input price inflation held at October’s six-month low in the UAE’s non-oil economy. Survey evidence showed that cost pressures mainly stemmed from higher material, technology, fuel, machinery and maintenance prices.
Despite higher costs, non-oil businesses reduced their selling charges, carrying on a renewed period of discounting from October. A desire to offer more competitive prices frequently drove firms to lower their fees, although the overall pace of decline was modest.
“Despite the positive headline figure, the survey data signaled a degree of uncertainty among firms about how long this strength will last,” he added.
