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Non-oil private firms in the UAE have seen a surge in business supported by an increase in spending and rising tourism activities in the UAE due to Expo 2020 Dubai, a latest business survey revealed.
The seasonally adjusted IHS Markit UAE Purchasing Managers' Index – a composite indicator designed to give an accurate overview of operating conditions in the non-oil private sector economy – surged to 55.7 in October, from 53.3 in September, marking the highest reading since June 2019.
Output levels rose at the strongest rate for more than two years, while confidence regarding future activity improved, the survey noted.
"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. The increases in both output and new business were sharp and the most marked since July 2019," David Owen, Economist at IHS Markit, said.
New orders grew sharply in October, driven by an increase in demand as the Expo 2020 Dubai began.
According to the survey, the event drove increased sales in a number of sectors as tourism strengthened and investment spending rose.
Dubai has set a target of 25 million visits for Expo 2020. The event has recorded more than two million visits in October, according to its organisers.
The IHS Markit survey suggested that while some firms added to their workforces to relieve capacity pressures, employment growth was only marginal overall.
"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," Owen said.
Latest data also signalled a slowdown in the overall rate of input cost inflation. Purchase costs ticked up only slightly.
Forecasts for future output improved considerably in October. The overall degree of optimism was the strongest since March 2020, IHS Markit said in its PMI report.
(Reporting by Seban Scaria; editing by Daniel Luiz)
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