UAE - Mubasher: The headline seasonally adjusted S&P Global UAE Purchasing Managers' Index (PMI) retreated to 54.8 in June from 55.6 in May, reflecting the improvement that has been witnessed in the non-oil private sector in each of the past 19 months.
Despite this recovery across the UAE's non-oil economy, the inflation pressures jumped to an 11-year high in June amid a surge in fuel prices that led to a sharp increase in business expenses and efforts to secure staff through higher wages, according to a press release on Tuesday.
The inflationary pressures have affected the purchasing activity in June, which rose marginally and at the weakest rate in a year.
However, companies continued to record a strong increase in new orders in June, driving a strong expansion in activity.
Meanwhile, investors are optimistic that demand would remain strong despite inflationary pressures, boosting confidence for the year ahead, as output projections improved to the highest since October 2021.
The Economist at S&P Global Market Intelligence, David Owen, said: "Firms were unwilling to pass higher costs on to customers in June, as output charges were reduced at the fastest rate in over a year-and-a-half. According to panelists, the threat of strong competition led them to offer price discounts to protect their sales."
Meanwhile, Owen added: "The ratio between the input price and output price indices was the highest on record, signaling that price rises for customers are likely in the coming months."