{"id":93514,"date":"2024-07-04T00:00:00","date_gmt":"2024-07-04T00:00:00","guid":{"rendered":"https:\/\/enterpriseam.com\/uae\/non-oil-business-sees-slower-growth-in-june-amid-increased-competition-and-accumulated-backlogs\/"},"modified":"2024-07-04T00:00:00","modified_gmt":"2024-07-04T00:00:00","slug":"non-oil-business-sees-slower-growth-in-june-amid-increased-competition-and-accumulated-backlogs","status":"publish","type":"post","link":"https:\/\/enterpriseam.com\/uae\/2024\/07\/04\/non-oil-business-sees-slower-growth-in-june-amid-increased-competition-and-accumulated-backlogs\/","title":{"rendered":"Non-oil business sees slower growth in June amid increased competition and accumulated backlogs"},"content":{"rendered":"

The UAE's non-oil business expanded at its softest rate since February 2023 <\/strong>on the back of competitive pressures and lower output, continuing a slowing growth trend that began at the start of the year, according to S&P Global\u2019s UAE Purchasing Managers\u2019 Index (pdf)<\/a>. The index dipped to 54.6 last month, down from 55.3 in May<\/a>, still remaining above the 50.0 threshold that separates growth from contraction. <\/p>\n

Companies saw a \u201crecord accumulation\u201d of backlogged orders <\/strong>due to strong demand, the persistent impact of April\u2019s floods, and the ongoing Red Sea shipping crisis. However, the record inventory is \u201cshowing signs of easing, a trend that is likely to continue as the country recovers from April's floods and supply chains adapt to the current situation in the Red Sea,\u201d S&P Global Market Intelligence Senior Economist David Owen said.<\/span><\/p>\n

Still, robust demand is driving sustained expansion: <\/strong>\u201cCompanies are still enjoying strong customer demand and robust sales pipelines, which are sustaining output expectations and driving purchasing activity,\u201d Owen said. Strong demand meant businesses saw exports rise at their sharpest level since October last year on the back of increased acquisition of new clients.<\/p>\n

Increased inflationary pressures led to price hikes: <\/strong>Businesses raised their selling prices for the second consecutive month, albeit modestly, as they continued to pass increased costs amid inflationary pressures \u2014 the highest seen in two years, according to purchasing managers \u2014 on to consumers. Alongside the rise in prices, salaries also saw an uptick. <\/p>\n

Heightened competition is also driving firms to raise their prices, <\/strong>as businesses are \u201cfeeling the pain on their balance sheets and having to protect their margins,\u201d Owen highlighted.<\/p>\n

Staffing levels grew last month <\/strong>but at the slowest rate since January as companies look to manage higher costs. <\/p>\n

Businesses are still optimistic: <\/strong>Despite falling slightly from May, business sentiment was still \u201camong the best observed in the past four years,\u201d according to the survey. Expectations for future demand growth prompted businesses to hike input purchasing. <\/p>\n

DUBAI-<\/p>\n

Dubai\u2019s PMI also slowed to its lowest level since February 2023 <\/strong>last month, falling to 54.3 in June, down from 54.7 in May. Despite new orders expanding in June, business activity grew at its most sluggish pace in three years, on the back of \u201chigh market competition that had limited their ability to take advantage of strong demand conditions.\u201d<\/p>\n

Inflation pushed input prices to rise at their fastest pace in two years<\/strong>, leading to companies charging higher prices for the second consecutive month. On the other end, supplier performance saw a marked improvement, accompanied by an increase in staffing levels and positive sentiment. <\/p>\n

ELSEWHERE IN THE REGION- <\/p>\n