UAE non-oil economy posts steady growth in October, hiring momentum softens

Dubai: The UAE’s non-oil economy recorded another month of solid expansion in October, supported by firm output growth and sustained demand, according to the latest Purchasing Managers' Index survey. While the pace of improvement eased slightly from September, the PMI remained above recent levels and comfortably in expansion territory.

The headline S&P Global UAE PMI slipped to 53.8 in October from 54.2 in September, but stayed higher than in the previous four months and above the neutral 50 mark. Firms reported a further rise in activity as new projects and stronger customer demand supported output for the third straight month.

New order volumes rose sharply, though at a softer pace than September. Foreign demand increased only marginally. Companies continued to scale up purchasing activity, marking the biggest increase in input buying since June, stabilising inventories after a third-quarter decline.

Hiring softened as firms took a more cautious stance on expansion. Job creation was modest and the slowest since March, reflecting weaker sentiment about the outlook. Optimism over future output fell to its lowest since late 2021, with survey respondents noting market competition and pressure on margins.

Input cost inflation eased for a second month, posting the softest rise since June. Only a small share of firms reported higher costs, allowing output prices to remain broadly stable for a second month.

Backlogs continued to rise as capacity pressures persisted, with firms citing new business growth and administrative delays.

"The pace of new business growth has recovered well since its low in August, supporting increases in output and purchasing activity," said David Owen, Senior Economist at S&P Global Market Intelligence. "However, employment remained a weak spot, with October data showing the slowest rise in job numbers in seven months. This partly reflected a relatively subdued level of business confidence.

"In fact, the latest survey revealed that firms were the least optimistic in nearly three years. Although most companies still anticipate that economic conditions will remain favourable and that order inflows will sustain activity, concerns regarding market competition and the potential impact on profit margins persisted.”

Dubai’s non-oil economy strengthened further, with the city’s PMI rising to 54.5 in October, the highest in nine months and up from 54.2 in September. Growth in new orders supported a sharper rise in output. Hiring increased for the seventh month but remained modest. Input prices rose at the fastest pace in six months, prompting firms to raise selling prices after a decline in September.