UAE business confidence at 'post-pandemic high', hiring too continues to grow: S&P Global's PMI data
New orders and projects, higher tourism have business owners turning bullish
Dubai: Business confidence didn’t have a summer slowdown in the UAE. On the contrary, confidence levels within the private sector closed August at a ‘post-pandemic high’, according to the monthly PMI tracker data from S&P Global.
Just as bullish was new hiring activity during August, as businesses took in more orders. “Firms grew increasingly confident that activity levels will continue on an upward path,” the report notes and sets up the highest business optimism since March 2020. (This was the month before the Covid created disruptions showed up in the local economy.)
In fact, business confidence in the UAE improved in seven of the eight months this year, with multiple sectors boosted by new project wins, while sectors such as travel and tourism as well as retail showed strength during the summer phase as well.
“The increase in new work was marked… (as strong economic growth supported higher customer numbers and greater household spending,” S&P Global notes. “Robust domestic sales were recorded alongside a solid rise in new export business, which was the fastest seen in just over a year.”
The August performance was, however, shaded by the June showing, when overall new business growth hit a four-year record.
"Despite this, firms continued to note capacity pressures, shown by a solid rise in backlogs of work," says the S&P Global monthly PMI update.
PMI reading
The August PMI (Purchasing Managers Index) reading is at 55, from 56 in July, but still suggesting an economy that is into expansion. Businesses got another boost from lower operational costs, though the cost of capital - and servicing debt - continues to rise after the interest rate hikes. (The PMI score is based on variables such as investments made by businesses, new hiring, price moves, etc.)
"Most PMI indicators continued to give positive signals, including uplifts in input purchases, inventory building, job creation and improving supply chain conditions," said David Owen, Senior Economist at S&P Global Market Intelligence.
This was 'due to higher costs and increased demand', according to S&P Global. "Overall input prices rose at a
faster pace than in the previous month, although the rate of inflation was still modest."
Two of the key sectors fuelling GDP activity, real estate and construction, had a good summer too. New project tendering and awards continued apace, with Q Properties just signing off a $476 million one at its Reem Hills development in Abu Dhabi. (Trojan General Contracting was the winner.)
On retail spending, the 'Back to School' promotions played their part through August, as did key categories such as car and gadget/home appliance sales.
"Businesses showed a greater degree of confidence that activity growth will be sustained over the next 12 months," says the S&P Global report.
The (August PMI) findings suggest the outlook for the non-oil sector is highly positive, with surveyed firms signaling that this was supported by rising new order inflows, greater tourism and increased investment