UAE business confidence at highest since October 2021, hiring rate best in 7 years
Lower cost of doing business leaves owners with flexibility on spending
Dubai: Business confidence in the UAE ended May at its highest level since October 2021 – and it was also reflected in hiring numbers. UAE private sector new employment rose at its fastest since 2016. This was confirmed as part of the monthly PMI data on the UAE private sector performance.
Businesses were making use of favourable outcomes on the operational side, with data suggesting price pressures were subdued through May.
“Rising new work intakes and strengthening demand conditions gave firms greater confidence for the year ahead,” said David Owen, Senior Economist at S&P Global Market Intelligence. “The Future Output Index showed optimism rising to the highest level since October 2021, with firms pinning their hopes on projections that the strong run of demand momentum will continue.”
UAE's PMI (Purchasing Managers' Index) for May came to 55.5, a drop from April's 56.6. But still well above the long-run average of 54.2. Anything over 50 denotes growth, with the PMI tracking business expenses, hiring trends, and wider sentiments.
"Hiring activity was robust, as job levels increased at the second-fastest pace since July 2016, reflecting a strong intent at companies to build capacity in the hope of sustained growth," said Owen.
Key sectors have reported fresh hiring, and construction is expected to pick up once summer is done. "There are master-developments in Dubai, Abu Dhabi that will come shortly off the drawing boards," said a project consultant. "The announcement of a new Palm Jebel Ali has raised hopes in the project space."
Retail sector continues to hold sway as is F&B, with both categories reporting new store openings and job creation. With new hotels getting ready to open between now and Q2-2024, expect more activity on the job side.
Businesses are flush with new orders
As new orders come in, 'expectations towards activity over the next year improved for the fifth consecutive month to the highest level since late-2021', the S&P Global report notes.
But with a slight downside. "Rising new order inflows nonetheless exerted great pressure on business capacity in May, extending the current sequence of backlog accumulation to almost two years," the report adds.
Price drops too
Selling prices from UAE non-oil firms further dripped in May, 'although at a slightly weaker pace than the 31-month record set in April'. "Where charges fell, panellists often mentioned that strong competition in the market led them to offer lower prices to clients, while some looked to shift excess stocks."