BY Staff Reporter
Dubai: The Israel-Iran war was a key factor in UAE businesses seeing lower demand during June, with their clients ‘hesitant to spend’. Now that the conflict has ceased, these businesses will be hoping for a quick return to their sales momentum.
New orders were at their lowest since September 2021, according to S&P Global data.
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However, UAE entities will benefit from having to deal with reduced cost of operations now that the ceasefire is in effect. “The rate of input cost inflation in the UAE was the lowest seen in nearly two years, which allowed firms to offer discounts to customers,” said David Owen, Senior Economist at S&P Global Market Intelligence.”
“With consumer price pressures appearing limited, the latest (PMI) data suggests that a rebound in sales growth is wholly possible in the coming months should regional tensions ease.”
Passing on cost benefits
With their ‘cost pressures subdued’, UAE companies reduced their selling prices for the ‘first time in six months – although the rate of discounting was only marginal’.
Compared to the trends in the first 3 months of the year, UAE businesses increased their hiring activity in June. “A desire to ease pending workloads led non-oil firms to expand their staffing capacity,” says S&P Global.
June PMI
The Purchasing Managers Index (PMI) reading for UAE private sector during June did rise to 53.5 from 53.3 in May. (The PMI score gives an overview into how businesses are using funds, their order and delivery cycles, hiring trends, and sentiments. A score of over 50 suggests they are in expansion territory.)
“The impact (from the regional conflict) was primarily felt on the demand side, as some businesses reported a slowdown in orders driven by heightened tensions,” said Owen. “This resulted in a further easing of overall new business growth (during June).
“With consumer price pressures appearing limited, the latest data suggests that a rebound in sales growth is wholly possible in the coming months should regional tensions ease…”
Source: Gulf News
