Dubai: As they picked up more orders in the final weeks of 2023, Dubai businesses are taking on more staff numbers - and even raising wages to attract and retain personnel.
It all meant higher expenses, but for now Dubai businesses seem to be in a position to absorb the costs. "Reports of increased wages and higher input demand meant that overall expenses still ticked higher, but at a subdued pace," says the latest report by S&P Global on the PMI (purchasing managers index) score for December.
So much so, job creation during December among local companies was at its fastest pace in 4 months. Non-oil companies cited 'efforts to expand operations and fulfil output requirements' as reasons for the new hiring. Job creation was broadly in line with the series average," S&P Global notes.
"(Dubai) firms enjoyed a rapid increase in new work - the second-quickest since the middle of 2019 - confirming the strength of market demand across the emirate."
It meant that 2023 ended with job creation in Dubai running in positive territory. Whether retail, travel, banking, technology or construction, hiring was rated as 'brisk' by job consultants for the better part of the year.
The PMI is based on what businesses plan to spend, their hiring targets, and their costs.
Good to go in 2024?
Businesses are feeling good about their prospects in 2024. This is where the recent project and order wins will play a part. "The improvement led to a modest pick-up in business expectations, following a drop in November when (Dubai) firms cited intense price competition as a noteworthy risk for 2024," said David Owen, Senior Economist at S&P Global Market Intelligence.
"Competition for market share is still a concern, with survey indicating that this is partly driving a fall in selling charges. Nevertheless, the softening of cost burdens in December should help to limit margin pressures."
level of optimism (among Dubai businesses) was one of the strongest recorded since prior to the COVID-19 pandemic...
Lower inflationary pressures has been the biggest takeaway for businesses in the final months of 2023, helped by lower material and fuel costs. But their cost of finance is still on the higher side, and this is the one area where companies will hope for some good breaks going forward. Any announcement to this effect from the US Federal Reserve will come in handy.
On the supply side, 'lower material prices allowed businesses to negotiate lower vendor fees'. (In the coming weeks, businesses in the UAE will find whether the shipping issues in and around the Red Sea could lead to short-term cost spirals.)
For now, "After slipping to a seven-month low, the latest survey data signalled a recovery in business expectations towards the year-ahead outlook at the end of 2023," S&P Global notes. "In fact, the level of optimism was one of the strongest recorded since prior to the COVID-19 pandemic."