UAE Non-Oil PMI Falls to 54.8 as Prices Rise at a Record Pace
Key Facts
The UAE’s non-oil private sector Purchasing Managers’ Index fell to 54.8 points in October from 55.3 points in September, but remained above the 50-point threshold separating growth from contraction, according to Reuters. At the same time, selling prices rose at their fastest pace since the survey began in August 2009, signaling that continued expansion was accompanied by mounting price pressures. David Owen, an economist at S&P Global, said the unprecedented increase reflected companies’ efforts to pass cost burdens on to customers. He added that companies were affected by higher fuel prices and increased charges for essential materials. October’s survey thus combined resilient business activity with accelerating cost pressures in the non-oil sector.
Input cost inflation accelerated to its highest level since June 2022, driven mainly by higher purchase prices for raw materials, fuel, energy and shipping, according to Reuters. The increase coincided with a record rise in selling prices, pointing to some operating costs being passed on to customers. Despite the decline in the headline index from September, companies said they received new orders at a faster pace, adding new customers and securing repeat business from existing ones. New export orders also rose at their fastest pace in two years. These indicators show that strong domestic and foreign demand continued to support activity even as input costs increased.
Output growth remained strong in October, although it edged down from September’s seven-month high, according to Reuters. Companies cited gains in construction, retail, tourism and manufacturing. In Dubai, the Purchasing Managers’ Index rose to an eight-month high of 54.6 points in October from 54.5 points in September, according to Al-Ittihad News Center. Dubai’s reading offers a stronger picture of the emirate’s activity momentum, while the broader UAE index remained in expansion territory despite falling from the previous month. The Purchasing Managers’ Index measures the direction of business activity and does not represent the rate of gross domestic product growth.
Employment edged lower, marking the third decline in five months, as some companies cut staff to control costs, according to Reuters. Backlogs rose again sharply, but their accumulation was the slowest in three months. This reflects strong demand coinciding with continued operating pressures, without order growth leading to increased hiring in October. Meanwhile, business confidence improved, and companies’ activity expectations for the coming year reached their highest level since January, according to Al-Ittihad News Center. Companies attributed the improved outlook to expectations of strong demand and hopes for better regional conditions.
Owen warned that October’s results point to greater inflation risks for the UAE economy in the fourth quarter, particularly amid successive increases in petrol and diesel prices, according to Arab News. The concerns follow a September increase in non-oil companies’ selling prices at the fastest pace in more than 15 years, amid higher raw-material and shipping costs, according to Reuters. On consumer inflation, the central bank said average inflation was 1.3% in 2025 and forecast 1.8% in 2026 and 2.0% in 2027. Annual headline inflation also accelerated to 1.9% in the fourth quarter of 2025 from 1.1% in the third quarter, with housing and utilities costs among the contributing factors; they account for 35.1% of the consumer basket and rose 3.9% year over year in the fourth quarter of 2025. These figures provide context for the price risks highlighted by October’s survey, while the key point to watch is how fuel, materials and shipping costs pass through to prices during the fourth quarter.