UAE non-oil firms sharply raised prices in October amid rising confidence

UAE non-oil firms significantly increased their selling prices in October, passing on higher operating costs to consumers, as confidence among companies surged. The seasonally adjusted S&P Global UAE Purchasing Managers Index decreased slightly to 54.8 in October from 55.3 in September, but remained above the 50 threshold indicating economic growth.

Firms raised output prices at the highest rate since the survey began in August 2009, attributing the increase to rising operating costs and margin protection. Costs for companies escalated at the fastest pace since June 2022, driven by higher prices for raw materials, fuel, energy, freight, maintenance, storage, and rent. David Owen, principal economist at S&P Global Market Intelligence, stated that the sharp rise in selling prices reflected efforts to shift cost burdens onto customers, with firms facing the impact of higher fuel prices and increased charges for essential materials.

The report indicated a solid improvement in business performance, with new order growth and output continuing to rise strongly. Business confidence also rose to its highest level since January, driven by sectors such as construction, retail, tourism, and manufacturing. However, employment levels fell marginally, marking the third decline in the past five months as some firms reduced headcounts to control costs.

Overall, non-oil firms in the UAE are becoming more optimistic, with year-ahead expectations reaching a peak since January. The Dubai PMI also hit an eight-month high in October, signaling a strong improvement in business conditions, with a notable increase in new business volumes.