Significant expansion in non-oil private sector driven by a faster increase in output and new orders
Business activity in the United Arab Emirates rose to the highest level in more than two years last month, helped in part by an influx of tourists drawn to Expo 2020 Dubai.
A Purchasing Managers’ Index compiled by IHS Markit rose to 55.7 in October from 53.3 in September, above the 50-mark separating growth from contraction and signalling a significant expansion in the Gulf country’s non-oil private sector. The increase was driven by a faster increase in output and new orders.
“The Expo 2020 finally began in the UAE at the start of October and brought a highly welcome upsurge in growth across the non-oil private sector,” said David Owen, economist at IHS Markit. “The key test for the UAE economy will be whether this initial uplift in demand from the Expo can be sustained over the coming months.”
After a year’s delay, Dubai is hoping Expo attracts enough tourists to help solidify a nascent economic recovery. According to IHS, the event drove sales last month in multiple sectors, including tourism.
- New orders growth was substantial, driven by an increase in demand from Expo.
- Companies increased output levels to the most since July 2019 as the loosening of Covid-19 restrictions helped boost activity.
- Employment figures showed only subdued growth despite increasing pressure on business capacity.
- Purchase costs saw a slight uptick, while staff costs dropped for the first time since early this year. That led to overall expenses rising at the slowest pace in five months.
- Optimism about future activity among firms was the strongest in more than a year.
In neighboring Saudi Arabia, business conditions continued to improve as new orders rose amid a recovery in local demand. While IHS Markit’s PMI survey fell to 57.7 from 58.6 in September, this was still the second-highest recorded since the start of the pandemic.
Purchasing activity rose at the fastest pace in three months as both input buying and inventories expanded. Job creation also increased, though the rate of growth was marginal.