UAE - Mubasher: The UAE’s seasonally adjusted Purchasing Managers' Index (PMI) increased to 56.6 in October 2022 from 56.1 last September, lower than August's over-three-year high of 56.7.
The index signalled another powerful improvement in the non-oil economy, in line with strong expansion in business activity at the beginning of the fourth quarter (Q4) of 2022, according to the S&P Global PMI’s latest data.
Furthermore, the growth rate was endorsed by a hike in output and new orders, while firms witnessed the joint-strongest expansion in 11 months.
Robust demand conditions led enterprises to widen their employment numbers at the fastest pace since July 2016 and increase the purchase inputs to the highest rate in over three years.
Additionally, companies boosted their purchasing activity to secure inventories for future work.
The report noted that purchases increased in October 2022 to the highest level since mid-2019.
However, business confidence towards future production levels weakened slightly and was still lower than the historical trend.
It is worth noting that firms reduced their output charges for the sixth consecutive month last October to maintain a competitive environment.
David Owen, Economist at S&P Global Market Intelligence, noted: “The upturn was led by sharp expansions in business activity and new orders, giving further evidence that domestic firms were not only weathering the global economic storms, but enjoying strong demand growth.”
Owen elaborated: "The key movements in October were seen on the capacity side, as businesses responded to rising backlogs by increasing their employment numbers at a faster rate. In fact, the pace of job creation was the quickest since July 2016.”
He added: “Firms also looked to stock up on inputs as they prepare work schedules to address their backlogs, leading to a rapid increase in purchasing activity that was the fastest for over three years.”
The economist said: "Pricing data showed that UAE non-oil firms continued to enjoy mild inflationary pressures in October. Input costs rose only slightly, helped by reductions in fuel and transport costs in line with recent falls in global oil prices. This meant that businesses were able to lower their output charges, although the rate of discounting eased to the softest since July."
