Selling prices across the UAE dropped by their fastest pace since the 2009 recession in November, data released on Thursday showed.
The UAE’s purchasing managers’ index (PMI) registered 47.0 last month, down from 48.7 in October, according to the Emirates NBD PMI survey, done in collaboration with IHS Markit.
“Input costs rose at the fastest rate since January even as firms were cutting output prices, speaks to the challenging business environment and the pressure this is putting on firms to compete on price,” commented Emirates NBD head of MENA research Khatija Haque.
The price drop along with marketing efforts, however, bolstered domestic demand, prompting both output and new work to rise by a faster rate in November from the previous month. Moreover, increased demand from exports resulted in growth for new orders during the month, with new export orders rising at the fastest pace in four months.
The report also noted that some businesses had reported rising orders from other GCC countries.
As a result of this stronger growth in output and new orders, the UAE’s headline PMI increased to 55.8 in November from 55.0 in October, whereas average PMI, with just one month left in 2018, registered 55.7, which is marginally lower than the average of 55.9 recorded in November 2017. This signalled growth in the “non-oil private sector at a similar rate to 2017. Official data showed the UAE’s non-oil sector grew 2.5% in 2017,” the report said.
In terms of the UAE’s employment index, it increased slightly to 50.6 last month from 50.1 in October, although 94.2% of firms said their headcounts were unchanged from October.
Meanwhile, 3.1% of UAE companies said they had raised the number of their employees, citing higher workload, the report showed, indicating that only 1.4% of survey respondents saying they had increased salaries.
“Purchasing activity increased sharply in November, as firms responded to increased new orders and output requirements. However, the overall level of inventories was unchanged, suggesting that firms are unwilling to invest in pre-production goods until they are actually required,” the Emirates NBD PMI report said.
As for the future outlook, companies remained optimistic, despite a slight decline in the index from October.
“Exactly 75% of firms surveyed expected their output to be higher in a year’s time, compared with 6.7% who predicted lower output,” the report concluded.