UAE businesses see sharp rises in salary costs: S&P Global

Dubai: UAE's private sector businesses are seeing sharp rises in their salary costs as hiring picks up again, according to the latest S&P Global update.

Also, the cost-of-living increases 'drove salary demands higher', which is going to be another headache businesses will have to deal with.

"Selling prices also rose at a quicker pace in August, which may become a concern for consumers if the trend continues," says the S&P report, which tracks the monthly PMI (Purchasing Managers Index) data.

Cost inflation

Worryingly, the rate of input price inflation 'quickened for the second month in a row'. It meant business costs have risen to its highest level since February.

"The chief driver of growing cost pressures was wages, which many companies raised due to cost-ofliving pressures and performance incentives," says the S&P report.

"This was accompanied by a marginal uptick in employment across the non-oil sector."

At the same time, there was falling demand for purchased items and that led to a softening of purchase price inflation.

Weaker sales growth

Now, UAE businesses have reported weaker sales growth weakened - and that makes up a fourth month running of drops.

This brings the new orders index 'down to its lowest level since the middle of 2021', when the local economy was still coping with the Covid fallout. "The slowdown added to concerns of fading growth momentum and meant that output was increasingly reliant on backlogs of work," said David Owen, Senior Economist at S&P Global Market Intelligence.