In June, UAE businesses see new orders at highest levels since 2019 - and they are hiring too

Dubai: UAE private sector business are raking in new orders, with the June numbers being at the highest level since 2019. Just as vital, companies took in more fresh hires for a 14th successive month, according to the latest PMI data from S&P Global.

“The health of the non-oil private sector has now improved in each of the past 31 survey periods,” says the report, adding that the second-half of the year could offer equally sound prospects.

Most of the new jobs were being added in the sales divisions. What’s more, new job creation should retain its current solid footing.

"The extent of the inflows in new work was such that backlogs of work continued to rise in June despite a ramping up of activity, further job creation and an expansion of purchasing activity,” said Andrew Harker, Economics Director at S&P Global Market Intelligence.

“This should therefore support further increases in staffing levels in the months to come as firms try to keep on top of workloads.”

In June, sectors such as retail and travel and tourism booked another round of growth, helped by the activity during the Eid holidays. But market sources say activity remains on a high across other sectors too, with the tech and associated categories engaged in new hiring and boosted by project wins.

PMI reading

The UAE PMI for June was up to 56.9 from May’s 55.5, with the reading tracking activity across the private sector on metrics such as orders received, cost of operations, new hiring, etc.

“The index signalled a substantial strengthening of business conditions and one that was the most pronounced since June 2019,” said the report.

Managing costs?

Businesses haven’t reported an easing on their cost of operations, and in fact, input prices rose for a firth straight month. The inflation rate was also a its highest point across the last 12 months.

“Both purchase prices and staff costs increased at sharper rates than in May,” said the S&P Global report. “The rise in purchase prices was mainly linked to higher raw material costs, while wage inflation was attributed to positive business performance and the hitting of individual targets by some workers.”

Order backlog

Business owners remain reasonably assured that the strong order inflows will more than offset the cost side of things. There was a noticeable pick up in orders towards the end of the second quarter, and which should see these business through a busy summer.

“The rate of growth was substantial and quickened to the fastest since August last year,” the report adds.

According to Harker, "Some of this growth was predicated on the offer of discounts to customers, however, which may not be sustainable in the long-term given that input costs are rising."