Dubai: UAE business activity continued to hold strong for a second consecutive month – but that is also bringing on more competition as new companies try to lock into the growth that’s there.
This meant businesses were building up stocks to make sure they had enough to meet consumer/client demand, irrespective of which sector they were in. Because not having enough stocks – in sectors like retail ahead of the peak holiday buying – will mean buyers will look elsewhere.
This is why there were ‘concerns that a large number of firms are entering the market’, said David Owen, Senior Economist at S&P Global Market Intelligence.
“The build-up of competition was likely a key factor behind stock-building efforts, with businesses wary of falling behind in a fast-growing economy."
November PMI
The PMI (Purchasing Managers Index) tracking business activity and mood closed November at 57, and close to October 57.7 (which was a four-year high).
UAE businesses got a lot of things right – ‘new orders remained well inside growth territory, with increased demand, new clients, project inquiries and marketing efforts reportedly driving growth’, according to S&P Global.
Initial forecasts for the UAE economy in 2024 paint an upbeat picture. Real estate and construction sectors should extend their momentum through to the next year, while retail, tech and other categories too are primed for growth.
The PMI signaled that operating conditions improved rapidly midway through the final quarter, supported by strong trends for new business, output and inventories
UAE 'firms looked to ensure they were in a good position to take advantage of growth opportunities', said Owen. "Indeed, the uplift in buying – the fastest since July 2019 – supported the most rapid build-up of stocks in close to six years, benefitting both local businesses and trade partners."
The latest PMI report, however, does not provide more updates on new job creation. "The latest data pointed to a clear drop in confidence levels (among business owners)," it states. "This was mainly due to concerns at some companies that competitive pressures could erode market share.
"With this in mind, staffing growth stayed relatively mild, while salaries also ticked up only slightly."
It is believed that new hires continued in some sectors, but most employers were waiting until January or February to get active on this front.
