Dubai: The UAE’s private sector is facing the sharpest increase in their cost of operations, led by rises in steel and concrete prices as well as transportation charges. These businesses are now putting off new purchases to better manage their costs, which led to the first decline in input buying since November 2020, according to the latest Purchasing Managers’ Index (PMI) data from IHS Markit, the global research firm.
This in turn led to a slight decline in overall private sector activity during June, with flight cancellations and a sharp fall in sales from abroad also having a hand.
"Business conditions continued to improve at only a gradual pace in June, adding evidence to a mixed initial recovery from COVID-19 in the UAE non-oil sector,” said David Owen, Economist at IHS Markit. “Firms often mentioned that material shortages had hampered output growth, while new sales were curtailed by travel restrictions.”
The June PMI reading – which is a measure of private sector activity – slipped to 52.2 from May’s 52.3. Any reading above 50 shows the economy in growth mode.
But on the job creation side, June offered good tidings. Improving business outlook saw more firms willing to add to their workforce, though still in marginal numbers. Even then, this is the first increase in staffing since January and the “quickest for nearly two-and-a-half years”.
This helped firms to lower backlogs after a two-month run of accumulation, according to the report.