Inflation Doesn’t Stop UAE’s Biggest Business Upswing This Year


Inflation Doesn’t Stop UAE’s Biggest Business Upswing This Year


Business conditions in the United Arab Emirates improved at a slightly weaker rate last month as coronavirus-linked measures and flight cancellations slowed gains in the Middle East’s business and travel hub.

Non-oil business activity in the Gulf nation inched down to the lowest in four months, IHS Markit’s Purchasing Managers’ Index showed on Monday. There was a sharp drop in foreign sales as businesses reported a time lag in supplies of raw materials.

However, employment rose for the first time since January and at the quickest pace in more than two years.

“Business conditions continued to improve at only a gradual pace in June, adding evidence to a mixed initial recovery from Covid-19 in the UAE non-oil sector,” said David Owen, economist at IHS Markit.

In Saudi Arabia, which has banned its citizens from traveling to the UAE without receiving prior approval, business conditions continued an upward trend.

New business growth in the kingdom was at the highest level in five months. Job creation also rose at the fastest pace since late 2019, but was modest overall, IHS Markit said.

  • The UAE’s PMI dropped to 52.2 in June from 52.3 the month before.
    • The gauge slipped to the lowest since February, amid a slower upturn in new orders.
    • Shortages in raw materials pushed input prices up by the fastest pace in three months, resulting in firms raising charges for a second time in about three years.
    • Outlook for future activity improved for a seventh straight month, though it was mild.
    • The rate of growth for demand slipped for a second month but firms noted an improvement in customer demand
  • Saudi PMI was at 56.4 in June, unchanged from May.
    • Gauge mainly lifted by the fastest upturn in new orders since the beginning of 2021.
    • Input prices increased but there were indications that inflationary pressures have peaked.
    • New business inflows rose significantly as a result of better demand conditions; orders from abroad rose but overall demand growth was mainly a result of increasing domestic sales.
    • Business confidence was at a five-month-high with companies expecting further easing of Covid-19 measures.