Dubai: Higher costs are again proving to be an issue for UAE businesses, with the pace of growth during July dropping to the lowest in 3 years, according to the latest PMI data from S&P Global.
Many businesses had no choice but pass on the higher costs – partially - to their clients and consumers.
The cost inflation is now at its highest point in 2 years.
“Price inflation accelerated further, with companies experiencing the fastest rise in input costs for exactly two years,” said S&P Global in its latest report. “Higher input prices were once again partially passed through to customers, as output charges increased for the third month running.”
The cost increases have not been deterring companies from hiring, where possible. “Firms are generally optimistic, with confidence in the year ahead remaining strong, while hiring also continued in a bid to raise staff capacity," said David Owen, Senior Economist at S&P Global Market Intelligence.
Overall job creation did, however, soften to a six month low.
But UAE businesses will be alert for any cues that suggest economies and business conditions are weakening, Already, tremors are being felt in the US markets, where stocks have seen significant selloffs in recent days.
PMI reading
The UAE PMI number for July is 53.7 from 54.6 in June. The score indicates the level of activity carried on by the private sector and its participants through the month. It is based on factors such as their spending levels, order intakes, hiring and other factors. Any score above 50 shows them being in growth mode.
Yet, the 53.7 in July is the lowest for the UAE since September 2021. The index is also ‘below its long-run average of 54.4’, the S&P Global report notes.
"The drop in the UAE PMI is a further signal that non-oil sector growth is on a downwards trend in 2024," said Owen. "Not only is the index at its lowest for almost three years, posting 53.7 in July, but it has also lost momentum in four out of the last five months and fell below its long-run trend level (54.4).
Even then, the July PMI 'suggests that the non-oil sector is expanding solidly and could be strengthened if companies start to get on top of their workloads', said
