Dubai: Some companies in the UAE are still hiring additional staff, although a number of them continue to operate with skeletal workforces, according to the latest Emirates NBD Purchasing Managers’ Index (PMI) readings.
The employment subindex dropped to 47.5 in February, as about nine per cent of businesses surveyed reported lower headcounts relative to January and about 1.5 per cent having increased hiring. Staff-related costs were, however, unchanged from last month, “again reflecting a relatively soft job market”.
The overall PMI was at 53.4 in February, a slip from the 56.3 in January and the lowest since October 2016. “The drop in the headline index reflects slower growth in new orders last month — new export orders rose at the slowest rate in 11 months — as well as the steepest decline in private sector employment in the survey history,” said Khatija Haque, Head of MENA Research at Emirates NBD.
There are other factors compounding the woes of private businesses. The pricing environment “remains challenging and stiff competition led more than 13 per cent of firms on the panel to offer discounts in order to secure new work”.
So much so, selling prices in February dropped at the fastest rate in the survey’s history on a seasonally adjusted basis. The only silver lining in all this was the rise in input cost inflation being only marginal.
But the work backlogs is rising at the fastest rate since June last. “This partly reflects lower employment, but some firms have also reported that delays in receiving payments from customers have led to delays in completing projects, which would then be reflected in higher backlogs of work outstanding,” the survey compiled by IHS Markit finds.
“Businesses were also less optimistic about their future output than in January. Around half of firms surveyed expected their output to be higher in a year’s time, compared with nearly 70 per cent in January.”