Dubai UAE economy
The UAE economy is set to accelerate further by 2021, after the Expo 2020 hosting, according to a new World Bank forecast. Image Credit: Gulf News

Dubai: Confidence among business owners in the UAE hit a new high, while conditions posted their sharpest improvement in more than a year last month, suggesting stronger growth in the local economy, new data released on Sunday showed.

However, while optimism levels are high, employers are still reluctant to expand their payrolls or recruit new staff, leading an economic expert to believe that consumer spending will likely remain subdued.

The Emirates NBD Purchasing Managers’ Index (PMI), which is designed to provide insights into how the country’s entrepreneurs are faring, climbed for the second month running in April, hitting 57.6 from 55.7 in March.

It suggested that operating conditions in the non-oil private sector showed sharpest improvement since December 2017, thanks to new orders and ongoing projects.

Confidence among companies was also the highest since seven year ago. About 82 per cent of those surveyed for the study said output is likely to rise over the coming year.

“The improvement in the volume of activity and new order growth last month is encouraging. However, with firms still competing on price, there is still a reluctance to boost hiring and we haven’t seen a meaningful improvement in job growth. Household consumption is likely to remain constrained in the absence of job and/ or wage growth,”said Khatija Haque, Head of MENA Research at Emirates NBD

Economic growth in the UAE was earlier forecast to be at 2.6 per cent in 2019 and 3 per cent in 2020, as the country pushes infrastructure investments ahead of Dubai’s Expo 2020, according to the World Bank.

In Emirates NBD's study, higher new orders combined with a number of ongoing projects, led to a substantial growth in business activity in the UAE last month.

Output prices in April, however, fell for the seventh consecutive period, and was more marked compared to April, as companies resorted to offering price discounts to boost sales.