UAE firms regain momentum as customers face sharpest price rises since 2011

Customers of the UAE’s non-oil businesses are facing the sharpest rise in selling prices since May 2011, even as companies enjoy a stronger flow of work. According to Khaleej Times, September’s S&P Global survey showed that improving demand gave firms more scope to pass higher costs on to buyers. The recovery in activity is bringing relief to businesses, but a bigger bill for their customers.

The UAE Purchasing Managers’ Index, or PMI, held at 55.3, unchanged from August’s 20-month high. The index tracks business conditions, with a reading above 50 signalling improvement from the previous month. It draws on a monthly survey of purchasing managers at about 1,000 non-energy private-sector companies. September’s responses were collected between the 10th and 24th.

More work, more room to raise prices

Business activity expanded at its quickest pace since February, before the outbreak of war in the region. Companies across several sectors reported more customers and a healthy pipeline of work. New orders continued to increase, although more slowly than in August. Demand from abroad provided support: export orders rose for a third consecutive month, recording their strongest growth since November 2024.

That stronger demand coincided with another squeeze on business costs. Firms paid more for raw materials and freight, while the rise in their selling prices broadly matched the increase in supply costs. David Owen, principal economist at S&P Global Market Intelligence, said companies appeared to be taking the opportunity to rebuild margins—the gap between their costs and selling prices—after months of heavy cost pressure.

Owen said the non-oil economy had moved beyond the mid-year slowdown associated with the Middle East conflict.

Hiring was much less forceful than the recovery in work. Employers added staff only slightly in September after cutting jobs in August. Unfinished orders consequently accumulated again, although at a slower rate than a month earlier. The survey showed businesses taking on more work without a similarly strong increase in staffing.

Dubai strengthens, but costs remain a challenge

Dubai’s PMI climbed to 54.5 from 54.1 in August, reaching its highest level in seven months. Activity expanded at its fastest pace of 2026 so far, new orders increased markedly and export demand was the strongest in two years. Businesses in the emirate recruited more employees, yet unfinished work continued to build. Their selling-price increases were the steepest since January 2014 as higher costs reached customers.

Across the UAE survey, companies increased purchases of construction supplies, including concrete and steel, as well as electrical items. Stocks of inputs—the materials businesses hold for use—grew at the fastest rate since November 2023. Supplier deliveries improved for the fourth consecutive month, even as firms faced higher purchasing and transport bills.

The next test is whether businesses can handle rising workloads while keeping cost pressures in check. Owen warned that volatile oil markets and continuing constraints on shipping routes could keep costs and selling prices elevated. After September’s stronger activity, the figures to watch are hiring, unfinished work and whether the next round of supply costs brings further increases for customers.