UAE companies report subdued December sales

• PMI data shows rising cost pressures
• Higher salaries having big impact
• Consumers buying ‘less impulsively’

UAE businesses entered the new year without the usual festive-season boost, with the latest purchasing managers’ index showing softer demand and rising costs.

Although overall business activity remained relatively robust in December, particularly in the tourism sector, some companies reported subdued sales, citing intensifying competition and lingering economic uncertainty, according to the survey.

“Consumers are buying less impulsively and reallocating budgets more consciously, treating purchases as planned investments rather than spontaneous spending,” said Ekaterina Gorbacheva, global expansion director at Flowwow, a Dubai-based e-commerce company.

Cost pressures also picked up, with companies reporting the fastest increase in overall input prices in 15 months. Higher salaries were a key factor, alongside rising transport and maintenance costs, the report showed.

“December was characterised by an acceleration of cost pressures and leaner inventory strategies, indicating that many firms were feeling the pinch on their balance sheets,” said David Owen, senior economist at S&P Global Market Intelligence.

The seasonally adjusted S&P Global UAE PMI, which tracks non-oil private sector activity, dipped to 54.2 in December from a nine-month high of 54.8 in November. Scores above 50 indicate expansion.

James Swanston, senior Mena economist at S&P Global Market Intelligence, said the lower readings for output and new orders pointed to “softer domestic demand”.

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According to the PMI report, companies in the UAE took comfort from signs of “increased customer spending, rising tourism, greater technology adoption and supportive government policies”.

Naim Maadad, founder of Gates Hospitality, said the school holiday – term ended in the first week of December and the winter break lasted for more than a month – had encouraged more people to stay in the country and welcome friends and family to the UAE instead.

“At Gates, December was a strong month. We are seeing people coming here rather than the mass exodus witnessed in the past,” he told AGBI.