UAE's private sector records more business activity gains in January, but at a slower pace
Businesses take a more cautious approach on new hires to better manage costs
Dubai: The UAE’s private sector (outside of the oil-related industry) recorded another solid performance in January, but with the pace of growth slowing down from the pace set in the final three months of 2021. The slowing down, according to the consultancy IHS Markit, had to do with the Omicron-linked infection cases.
Overall, “Businesses continued to enjoy the benefits of a recovery in economic conditions and increased demand from the Expo,” said David Owen, Economist at IHS Markit, which brings out monthly readings on the state of key global economies through its Purchasing Managers Index (PMI). “The latest data further solidified this footing, but perhaps showed the first signs that growth had started to tail off.”
Businesses were also slowing down on new job creation, as they worked to keep inflationary pressures under check. But January did see another round of new job gains, but weaker than what was recorded in December. It meant that the UAE’s private sector has seen employment increases for an eighth straight month.
The PMI reading for January was 54.1 as against December’s 55.6. It gives a measure of how businesses are spending. Any score above 50 shows expansion.
"Raw materials were often cited as up in price, while global transport costs continued to surge upwards due
to supply-chain bottlenecks," IHS Markit reports. "The rise in expenses placed even greater pressure on firms’ margins, as output charges continued to fall amid efforts to boost sales."
Quick return to form?
Once the latest variant of the COVID-19 gets under control, “The (tourism) sector could quickly recoup this momentum in the coming months as the Omicron wave
appears shorter than previous ones,” said Owen. “Although firms face additional challenges from stronger inflationary pressures, global supply chain problems and a possible dip in activity once the Expo ends."