Stock-UAE-Economy
Even through being high summer, UAE businesses will be enthused by the smart pick up in new orders garnered during August. Image Credit: Shutterstock

Dubai: During August, UAE businesses took in new orders at the fastest rate since March and shrugging off any slowdown during peak summer. Last month’s perk up in activity also made up for a weak performance in July, which was the slowest in 3 years.

Even with new orders, businesses were not hiring at elevated levels during August. “Hiring growth across the (UAE) non-oil sector weakened in August and was the softest for seven months,” said the new PMI report from S&P Global. “While some firms added to their workforces to boost output, others made cuts to staffing levels.”

Some of the big orders were coming in from overseas clients. These orders eased any pressure on businesses’ operating capacity as ‘supply chains continued to recover and firms purchased more inputs’.

"(UAE) businesses remain confident that output growth will be sustained over the coming year, especially as sales pipelines remain strong and firms have ample levels of outstanding work to complete," said David Owen, Senior Economist at S&P Global Market Intelligence. "Capacity constraints are also easing which should further aid business activity."

Will job situation pick up?

Coming weeks will show whether the August dip in job creation was more seasonal than anything. There is talk about construction adding new jobs, while staffing levels in the hospitality sector too should be up for clear gains heading into the final three months of the year.

UAE PMI for August
The August reading of the Purchasing Managers Index recorded 54.2 after dropping to a 34-month low of 53.7 in July.

Watch the costs

The August PMI data also shows a further ‘steep increase’ in average input costs, with businesses citing higher expenses on raw materials, transport, IT equipment and maintenance.

“Wage costs also increased at the fastest pace since May,” says the S&P Global report. “However, a slowing of purchase price inflation meant that overall cost burdens were the softest in four months.”

According to Owen, "Firms should still be wary of their costs, as the survey data indicated another sharp increase in input prices in August, which drove through another uptick in prices charged to customers. Ongoing price mark-ups have the potential to curb demand, adding some uncertainty to the view that growth will continue unabated."