Price discounts boost new orders for UAE companies

3.1% Increase in hiring reported due to higher workloads

dubai — Steep price discounting, combined with other marketing efforts helped support domestic demand in the UAE with both output and new work rose at a faster rate in November as compared with previous month, disclosed Emirates NBD Purchasing Managers’ Index (PMI) released on Wednesday.

Largely as a result of the stronger output and new orders growth, the headline Purchasing Managers’ Index for the UAE rose slightly to 55.8 in November from 55.0 in October. The average PMI with just one month left of the year is 55.7, marginally lower than the average of 55.9 recorded in the same period last year, signalling growth in the non-oil private sector at a similar rate to 2017.

The employment index rose marginally to 50.6 in November from 50.1 in October, but the majority of firms (94.2 per cent) reported unchanged headcount last month. The 3.1 per cent of firms who reported increased hiring attributed this to higher workloads. Staff costs were only marginally higher in November, with just 1.4 per cent of respondents saying they had increased wages and salaries.

The monthly survey’s data showed that firmer export demand also contributed to overall new orders growth in November, with new export orders rising at the fastest pace in four months. Some businesses reported increased orders from other GCC countries in particular.

The fall in output prices was recorded in spite of a pick-up in the rate of cost inflation. Overall input prices rose to the greatest extent since the introduction of value-added tax (VAT) in January. The rise in overall input costs was driven by higher purchase prices, which respondents linked in turn to increased raw material costs and higher prices charged by wholesalers.

Rising output requirements led non-oil companies to increase their purchasing activity and employment in November. Input buying increased sharply, and at the fastest pace in the year-to-date. Employment, meanwhile, rose only modestly as firms attempted to limit costs.

Suppliers’ delivery times continued to improve as companies commented on an improved service from their regular vendors. That said, lead times shortened to one of the least extents in the survey so far.