UAE businesses kept hiring in May - but orders fell: S&P Global

Dubai: UAE businesses in construction, manufacturing and in the service sector are continuing to hire, with 'employment growth' closing May at its strongest level in 12 months.

Higher hiring had to do with companies having to manage elevated workloads, which is clearly evident in sectors such as construction and even in retail.

"Rising new orders contributed to another sharp increase in backlogs of work," says a new PMI (Purchasing Managers Index) report issued by S&P Global. This was the case even as the 'pace of accumulation' softened 'slightly to a 16-month low'.

The higher employment numbers ahead of peak summer bode well for the wider UAE economy. Businesses have cited higher operating costs, debt levels and the need to manage their corporate tax bills as the highest priority.

But new orders did drop in May. "The softer increases in output and new orders hint at momentum easing," said David Owen, Senior Economist at S&P Global Market Intelligence. "The sharp cutback in stocks (which was the fastest on record) and the broadly subdued outlook for activity suggest that firms are gearing up for softer growth."

The May PMI score - which gives an insight into business working conditions, spending and sentiments - dropped to 53.3 from 54.0 in April, which makes it the lowest reading in 44 months. The index remains well above the 50 mark, which indicates flat growth prospects.

"Although businesses continued to welcome strong demand from their clients, there were some reports that competitive pressures and weaker trade amid US tariffs had weighed on growth," said Owen.

There is yet to be any clarity on where the US tariffs are heading and how much it will re-arrange trade flows.

May brought in more orders, but at slower rates than in previous months.

"Businesses gave a modest assessment of their activity prospects in May," says S&P Global. "Optimism eased to its lowest since January, with nearly 10% of companies anticipating an expansion in the year ahead."