United Arab Emirates: PMI rises in October as Expo gets underway
November 3, 2021
The IHS Markit Purchasing Managers’ Index (PMI) rose to 55.7 in October from September's 53.3. October's result marked the strongest reading since June 2019. As a result, the index moved further above the 50-threshold, signaling a faster improvement in business conditions compared to the previous month.
Output and new orders growth both hit over two-year highs, amid spending and tourism resulting from the Expo 2020 which began in the month. That said, employment growth remained marginal, while inventories growth weakened and suppliers’ delivery times decreased, denting the overall figure somewhat. Input inflation slowed to a five-month low, which fed into a decrease in output prices. Amid the business brought by the Expo, firms’ optimism jumped to the highest level since March 2020.
IHS Markit’s David Owen cautions against unbridled optimism following the result:
“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. We also wait to see whether this will strengthen employment growth, as latest data showed a subdued rate of hiring despite growing pressure on business capacity.”