A survey published today reveals that the non-oil private sector in the UAE experienced its fastest growth in new business since almost two years ago in January, driven by a significant rise in new orders.
The seasonally adjusted S&P Global Purchasing Managers’ Index (PMI) for the UAE increased to 54.9 in January from 54.2 in December, marking the highest level in 11 months.
A reading above 50 indicates growth, while below 50 indicates contraction.
Strong demand was evidenced by a considerable surge in new orders, with its sub-index rising to 60.0 in January from 57.2 in December, reflecting the fastest pace in 22 months.
According to David Owen, Chief Economist at S&P Global Market Intelligence, “The UAE’s non-oil economy began the year on solid foundations, with a sharp increase in new orders prompting companies to boost production and significantly expand their purchases.”
Despite the acceleration in sales growth, companies slimmed profit margins due to competitive pressures, resulting in only a slight increase in average selling prices.
Conversely, input costs rose at their fastest rate in a year and a half, driven by higher raw material prices and wages.
Owen added, “The cost inflation rate across the sector reached an 18-month high, with businesses facing increased costs for a variety of materials.”
Business expectations hit a 15-month high in January, as firms expressed optimism regarding future demand conditions and expansion efforts.
In Dubai, the main PMI rose to 55.9 in January from 54.3 in the previous month, with new business growth reaching a 22-month high, leading to quicker hiring and inventory accumulation.