Non-oil business activity in the UAE grew at its slowest pace in nearly three years in July, a result of competitive conditions, rising price pressures, and capacity overloads negatively impacting performance, according to a survey released on Monday.

Indeed, the seasonally adjusted S&P Global UAE Purchasing Managers' Index fell to 53.7 last month from 54.6 in June, its lowest since September 2021.

The index also stayed under its long-term average of 54.4 yet remained over the 50-level separating growth from contraction.

“The drop in the UAE PMI is a further signal that non-oil sector growth is on a downwards trend in 2024. Not only is the index at its lowest for almost three years, posting 53.7 in July, but it has also lost momentum in four out of the last five months and fell below its long-run trend level (54.4),” according to David Owen, senior economist at S&P Global Market Intelligence.

Demand conditions remained positive in July, with sales increasing significantly, though at the slowest rate since April. Exports grew at the second fastest pace in nine months. However, intense competition led some firms to experience a decline in new order volumes.

The survey data indicated a significant rise in business costs in July, with input price inflation, including material prices, wages, and overhead costs, reaching its fastest rate in two years.

In addition, job creation also weakened to a six-month low last month, Zawya reports.

Looking ahead, non-oil companies' optimism about the continuation of favourable economic conditions over the next 12 months declined to its lowest level since January.

The Dubai PMI fell to its lowest point in two-and-a-half years last month to 52.9, down from 54.3 in June.

Output growth slowed slightly to its lowest level since September 2021, resulting in a reduction in job creation.