UAE Non-Oil Firms Hike Prices Significantly in October Amidst Soaring Business Confidence

Businesses in the UAE's non-oil sector substantially increased their selling prices during October, a move driven by the necessity to pass on escalating operating costs to consumers. Concurrently, a notable surge in business confidence was observed throughout the month.

The seasonally adjusted S&P Global UAE Purchasing Managers' Index (PMI) experienced a slight decrease to 54.8 in October, down from 55.3 in September. However, this figure remains above the 50-point threshold, which signifies growth in economic activity.

According to the report, output prices were elevated at the "sharpest rate" since the survey's inception in August 2009. Companies attributed these price increases to rising operating costs and a strategic effort to safeguard their profit margins. The report also indicated that costs for businesses escalated at their fastest pace since June 2022, primarily due to higher purchase prices.

Firms reported paying more for a diverse range of inputs, including raw materials, fuel, energy, freight, maintenance, storage, and rent. David Owen, principal economist at S&P Global Market Intelligence, commented, "The unprecedented rise [in selling prices] reflected efforts to pass cost burdens on to customers, with firms feeling the impact of higher fuel prices and increased charges for critical materials." He further noted, "The findings point to greater inflationary risks for the UAE economy in Q4, especially in the light of successive increases in petrol and diesel prices."

Overall, the PMI data suggests a "solid improvement in overall business performance." Both new order growth and output continued their strong upward trajectory, with business confidence reaching its highest level since January. Sectors such as construction, retail, tourism, and manufacturing reported higher activity, although some businesses cited constraints from regional conflict, competition, and reduced discretionary spending.

New orders saw a sharper increase compared to September, bolstered by the acquisition of new clients and repeat business. The overall volume of new export work expanded at its quickest rate in two years. Conversely, employment levels saw a fractional decline in October, marking the third decrease in the past five months. This reduction in headcounts by some firms to manage costs offset hiring efforts by others responding to increased sales.

"Order book levels grew at a faster rate in October, but capacity remains limited – signalled by another sharp increase in outstanding business," stated Mr. Owen. The UAE's economy has demonstrated consistent growth this year, largely propelled by non-oil business activity, notwithstanding the impact of the Iran war. The Federal Competitiveness and Statistics Centre reported that the country's real gross domestic product grew by 0.4 per cent annually to Dh961.9 billion ($262 billion) in the first half of 2026. The non-oil sector's contribution to the GDP during this six-month period increased by 1.8 per cent, reaching 79.2 per cent.

"Looking ahead, non-oil firms are becoming more upbeat. Year-ahead expectations rose to their highest since January, underpinned by robust demand forecasts and hopes that improving regional conditions will lift sectors such as tourism," said Mr. Owen. Daniel Richards, senior economist at Emirates NBD, observed that October's PMI survey indicates a "continued expansion" in the UAE's non-oil private sector, adding, "Demand remained firm … although the after-effects of the regional conflict continued to disrupt trade and raise costs."

In Dubai, non-oil private sector business activity also rose sharply, reaching an eight-month high in October with the Dubai PMI at 54.6, up from 54.5 in September, signalling a "strong improvement" in business conditions. This upturn was supported by a significant increase in new business volumes, the joint-fastest since February. Businesses also boosted their output levels, though staffing saw modest reductions. Similar to the broader UAE, Dubai's non-oil firms reported a record increase in selling prices in October, primarily passing on rising input costs to customers.

"Local firms were more confident about future activity in October, but cost considerations meant that stockpiling efforts were less pronounced than in September," the report concluded.