Dubai: UAE non-oil firms enjoyed a marked increase in new business during October, driven by rising spending and tourism amid the opening of the Expo 2020, according to the IHS Markit’s UAE Purchasing Managers’ Index (PMI).
Output levels rose at the strongest rate for more than two years, while confidence regarding future activity improved markedly.
“The Expo 2020 finally began in the UAE at the start of October and brought a highly welcome upsurge in growth across the non-oil private sector. The increases in both output and new business were sharp and the most marked since July 2019,” said David Owen, Economist at IHS Markit.
October’s headline PMI surged to 55.7 in October, from 53.3 in September, and was well above the 50 no-change mark. This was the highest reading since June 2019 and the first time since the start of the pandemic that it was above the long-run series average.
The PMI signalled a sharp expansion in business conditions during October that was driven by considerably faster increases in both output and new orders compared to a month ago.
Expo impact
New orders grew sharply in October, driven by a substantial increase in demand as the Expo 2020 began. According to panellists, the event drove increased sales in a number of sectors as tourism strengthened and investment spending rose. In contrast to domestic sales, export orders ticked up only marginally at the start of the fourth quarter.
Responding to the robust upturn in new business, UAE non-oil companies raised output levels sharply and to the greatest extent since July 2019. As well as the Expo, firms noted that the loosening of pandemic restrictions also helped to boost
Job creation
While some firms added to their workforces to relieve capacity pressures, employment growth was only marginal overall.
Latest data also signalled a slowdown in the overall rate of input cost inflation across the non-oil economy. Purchase costs ticked up only slightly, while staff costs fell for the first time since January. As such, overall expenses rose at the softest pace for five months.
With cost inflation only mild, average prices charged by non-oil companies decreased in October, amid continued efforts by firms to remain competitive and gain additional clients.
