{"id":97587,"date":"2024-11-06T00:00:00","date_gmt":"2024-11-06T00:00:00","guid":{"rendered":"https:\/\/enterpriseam.com\/uae\/non-oil-business-activity-saw-slight-pickup-in-october\/"},"modified":"2024-11-06T00:00:00","modified_gmt":"2024-11-06T00:00:00","slug":"non-oil-business-activity-saw-slight-pickup-in-october","status":"publish","type":"post","link":"https:\/\/enterpriseam.com\/uae\/2024\/11\/06\/non-oil-business-activity-saw-slight-pickup-in-october\/","title":{"rendered":"Non-oil business activity saw slight pickup in October"},"content":{"rendered":"

Non-oil business activity saw a slight acceleration in growth during <\/strong>October<\/strong>, driven by an overall increase in business activity as companies pushed to meet rising demand and contain backlogs, according to S&P Global\u2019s UAE Purchasing Managers\u2019 Index (pdf)<\/a>. The UAE\u2019s headline PMI rose to 54.1 from 53.8 in September<\/a>, still above the 50.0 threshold separating growth from contraction, but below the readings of 1H 2024.<\/p>\n

Despite increased new work intakes in October, demand momentum declined to its <\/strong>weakest level in 20 months<\/strong>, as some firms reported a drop in sales due to elevated market competition. Meanwhile, business activity grew at its highest clip since April, with companies raising output to meet sales volumes and maintaining strong client numbers. On the downside, the growth in employment came at its mildest rate in 2.5 years on the back of softened new business growth. <\/p>\n

This deceleration signals that \u201cthe non-oil economy is losing strength after a robust <\/strong>growth period in late 2023\/early 2024,\u201d <\/strong>according to S&P Senior Economist David Owen.<\/p>\n

On the bright side, competition is catching up with prices:<\/strong> Input cost inflation declined due to a slowdown in purchase prices and salaries. This development led to a reduction in average selling prices for the first time since April as firms looked to stay competitive amid rising competition.<\/p>\n

Backlogs are easing, but still indicate a healthy pipeline of work:<\/strong> The rise in backlogs is easing up due to improvement in supplier delivery times and rapid consumption of delivered inputs to keep up with orders, keeping stock levels at similar margins compared to the previous month. Heavy work backlogs and ongoing contracts are positive signs that the non-oil economy will continue to grow in the upcoming months even if sales decrease, Owen said.<\/p>\n

Business sentiment shifted to a slightly more optimistic outlook, yet remaining at one of <\/strong>its lowest levels this year. <\/strong>The positive expectations are driven by firms becoming increasingly confident in demand growth, due mostly to strong sales pipelines. However, uncertainty and high competition are still causing caution.<\/p>\n

MEANWHILE, IN DUBAI-<\/p>\n

Dubai\u2019s PMI saw slower growth in comparison to the UAE, falling to a three-month low of 53.2 in <\/strong>October<\/strong>, down from 54.1 in September. New business intakes increased by the lowest rate since early 2022 on the back of strong competition and challenging market conditions, leading to a slowdown in employment growth. Meanwhile, output growth rose to a five-month high in the emirate.<\/p>\n

Average selling prices dropped for the first time since April<\/strong> due to strong competition, despite an increase in input costs.<\/p>\n

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