Stock Abu Dhabi skyline
UAE businesses were boosted by higher exports and more orders coming in during April. Image Credit: Supplied

Dubai: UAE’s private sector businesses recorded another strong set of results in April, with a sharp rise in exports. However, there are concerns about rising costs of energy and raw materials, heightened by the continuing Russia-Ukraine conflict.

These increased expenses have forced UAE businesses to hike their selling prices ‘for the first time in nine months’, according to the latest update from IHS Markit, which tracks the monthly PMI (Purchasing Managers Index) reading of key economies.

"For now, businesses continue to enjoy strong sales growth, which allowed them to increase their output at the fastest rate in 2022 so far in April,” said David Owen, Economist at S&P Global. “On the flip side, optimism around future activity slipped to a four-month low as some firms expressed concerns that inflationary pressures and the competitive landscape will make output and profit gains harder to achieve."

The April PMI – which is a measure of orders placed by businesses, among other things – for the UAE reads 54.6 as against March’s 54.8. This signals a ‘robust improvement in the health of the non-oil sector’.

Employment numbers

Job creation was, however, muted during April, with businesses intent on clipping their labour-related costs. “Limited staff capacity meant that backlogs of work continued to rise solidly,” the IHS report notes.

UAE businesses on the whole remain confident that the uptick in activity will continue through the next 12 months. But against that confidence, there are harbouring concerns about inflation, supply concerns (a legacy from the pandemic times) and margin eroding price cuts by the competition, all of which would have material effect on profitability.

According to Owen, “For now, businesses continue to enjoy strong sales growth, which allowed them to increase their output at the fastest rate in 2022 so far in April. (But) cost pressures remained at their highest level for more than three years,” leading to ‘greater concern of an inflationary-led dip in demand’.