Job growth in UAE’s private sector weaker than 2017

Job growth in the UAE’s non-oil private sector has stagnated so far this year, with year-to-date growth weaker when compared to 2017, according to a survey.

The monthly Emirates NBD Purchasing Managers’ Index (PMI) found that year-to-date, the employment index averaged 50.8, compared with 51.2 in the same period last year, and indicating even weaker job growth relative to 2017.

Employment was broadly unchanged in July, with the index barely above the neutral level at 50.2, the report stated.

Despite higher levels of work outstanding, firms hired additional staff at the slowest pace in over two years, it added.

Overall, the PMI declined to 55.8 in July from 57.1 in June – the lowest reading in three months.

Although output growth eased to a three-month low in July’s survey, the pace of expansion was sharp overall and well above the series’ historical average, the report said.

Businesses in the non-oil private sector noted that strong demand for goods and services led to higher output requirements.

In terms of overall new orders, growth eased to a four-month low.

However, new orders from abroad increased at the sharpest pace in three years during July. Many firms linked the improvement to a stronger demand climate in neighbouring GCC countries and Europe.

Backlogs of work also increased in July, but the rate of growth was slower than in June.

On the price front, the rate of input cost inflation remained muted and below the historical average. Purchase price inflation accelerated fractionally in July, while staff cost inflation softened to a 14 month low.

Promotional activity and intense competitive pressures across the UAE’s non-oil private sector led firms to reduce their selling prices for the third month running in July. The rate of decrease was moderate overall, although faster than that recorded in June.

Khatija Haque, head of MENA Research at Emirates NBD, said: “While input cost inflation remained relatively modest in July compared with earlier this year, firms continued to lower average selling prices, with output prices declining for the third month in a row.

“The continued squeeze on firms’ margins is likely a key factor in the soft employment survey, as firms remain under pressure to contain costs and boost efficiency.

“Purchasing activity accelerated slightly in July but the actual stock of pre-production inventories was unchanged from June, which suggests that firms may be becoming more efficient in their inventory management.”

She added: “Overall, businesses remain very optimistic about the coming year, with more than 60 per cent of respondents expecting their output to be higher in year’s time. However, this is lower than the May and June surveys. ”