Research from Dubai's largest bank said selling prices in the UAE fell at fastest rate since 2009
Selling prices in the UAE fell at the fastest rate since the 2009 global economic downtown in November even as firms were cutting output prices, according to new statistics from Emirates NBD’s seasonally-adjusted Purchasing Managers’ Index (PMI).
Improved demand and expectations of further increases in new orders led to business confidence remaining high in November, only slightly lower than October’s high, the latest monthly report said.
According to Khaija Haque, the head of MENA research at Emirates NBD, the fact that input costs rose at the fastest rate since January “speaks to the challenging business environment and the pressure this is putting on firms to compete on price.”
However, steep price discounting helped firms secure new work over the course of the month, which Haque said helped support domestic demand. Both output and new work rose at a fast pace in November compared to October.
“Firmer export demand also contributed to overall new orders growth in November, with new export orders rising at the fastest pace in four months,” Haque added. “Some business 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, with overall input prices rising to the greatest extent since the introduction of value-added taxes in January. According to Emirates NBD, the rise in overall input costs was driven by higher purchase prices, which respondents linked to increased costs in raw materials and higher prices charged by wholesalers.
Additionally, rising output requirements led to non-oil companies increasing their purchasing activity and employment in November. Input buying increases sharply, and at the fastest pace year-to-date.
Employment, however rose only modestly as firms attempted to limit costs.
The data from Emirates NBD also indicated that suppliers’ delivery times continued to improve as companies reported improved service from regular vendors. That said, lead times were found to have shortened.