UAE businesses face intense capacity pressures as backlogs grow sharply

UAE businesses face intense capacity pressures as backlogs grow sharply

Published: Wed 3 Apr 2024, 8:01 PM Last updated: Wed 3 Apr 2024, 8:02 PM

Business conditions in the UAE non-oil private sector strengthened at a sharp pace in March, data showed on Monday.

The latest S&P Global PMI survey revealed another steep rise in new order inflows drove a sustained increase in output levels. Nevertheless, companies faced considerable pressure on their workloads, amid reports of administrative delays and increased supply constraints due to the Red Sea shipping crisis. As a result, the survey data signalled the joint-fastest accumulation of backlogs of work in the survey’s near 15-year history (alongside June 2018).

At the same time, business optimism ticked up to its highest for six months, and firms experienced a softer increase in their expenses. Margins appeared to worsen though, as increased competition contributed to the strongest drop in output prices for three-and-a-half years.

The seasonally adjusted S&P Global UAE Purchasing Managers’ Index (PMI) registered 56.9 in March, down marginally from 57.1 in February. The index remained strongly above the 50.0 no-change mark to signal a robust improvement in non-oil operating conditions.

Strong demand remained a key feature of growth in the non-oil economy, as surveyed firms saw another sharp uplift in new order volumes.