The seasonally adjusted S&P Global Purchasing Managers Index rose to 56.6 in October from 56.1 in September. The index reading was a touch below the three-year high of 56.7 hit in August, underlining the health of the country’s non-oil economy.
A reading above the neutral level of 50 indicates growth, while below indicates contraction.
“UAE PMI has risen again…suggesting that the non-oil private sector had continued to grow at a robust pace early in the fourth quarter,” said David Owen, economist at S&P Global Market Intelligence.
“The rebound was led by a strong expansion in business activity and new orders, providing further evidence that domestic companies not only weathered the global economic storms, but also enjoyed strong demand growth.”
A further significant expansion of business activity at the beginning of the fourth quarter was decisive for the upturn, as the companies surveyed reported higher customer demand.
The activity growth rate in the non-oil sector rose sharply since September and was the second fastest since July 2019.
New orders also rose sharply in October, with companies posting the strongest expansion in 11 months.
Some companies cited growth in new customers, lower prices, improved services and the upcoming FIFA World Cup in Qatar as factors contributing to the sharp increase in sales.
However, with a sharp increase in demand, companies faced an additional strain on operating capacity in October, which led to a rise in backlogs. Both existing projects and shipping delays caused by coronavirus contributed to the build-up of backlogs.
Companies dealt with backlog pressures by increasing headcount as rapidly as possible since July 2016 and extending the sequence of the Emirates’ employment growth to six months.
“The key moves in October were on the capacity side, as companies responded to rising backlogs by increasing their employment numbers,” Mr Owen said.
“Companies also attempted to stock up while preparing work schedules to clear their backlogs, prompting a rapid increase in purchasing activity at the fastest rate in over three years.”
The UAE’s economy, which recovered sharply last year from the slowdown caused by the pandemic, has picked up momentum this year. According to the central bank of the United Arab Emirates, the second largest economy in the Arab world is expected to grow by 5.4 percent this year.
Emirates NBD forecasts the economy to grow 7 per cent in 2022, on the back of a higher estimate of the energy industry’s output and “robust growth” in the non-oil sector, preparing the country for its fastest annual expansion since 2011 Production grew by 6.9 percent.
Meanwhile, Abu Dhabi Commercial Bank forecasts growth of 6.2 percent, driven by both oil and non-oil gross domestic product growth.
The UAE’s foreign trade exceeded AED1 trillion (US$272 billion) in the first six months of this year, compared with Dh840 billion in the same period before the Covid-19 pandemic.
Revenue from the tourism sector, a major contributor to the country’s non-oil economy, topped Dh19 billion in the first half of this year, while the total number of hotel guests reached 12 million over the same period.
The growth in the number of hotel guests increased by 42 percent compared to the same period before the pandemic.
According to Property Finder, off-plan and secondary property sales in Dubai hit a 12-year high in the third quarter, both in terms of volume and value.
Average residential property prices in the emirate rose 8.9 percent in the 12 months to the end of September, with average house prices up 8 percent and villas up more than 14 percent, according to a CBRE report.
In Abu Dhabi, sales prices for villas and apartments increased by 4 percent annually in the third quarter. The Emirate recorded 7,474 real estate transactions was worth more than Dh22.51 billion in the first six months of the year.
Meanwhile, Egypt’s PMI index came in at 47.7 in October, slightly higher than September’s reading of 47.6.
This is the index’s highest reading since February but remains below the survey’s long-term average, underscoring a deterioration in operating conditions in the country’s non-oil private sector economy.
Firms reported a “continued decline” in new business inflows as inflationary pressures mounted and spending slowed.
“Inflation continued to weigh on consumer sales and business spending,” Mr. Owen said.
“Companies signaled that deteriorating local and global economic conditions were likely to hurt the non-oil sector even further, with business optimism for the next 12 months slipping to the lowest levels in series history.”
Updated November 03, 2022 7:45 am