UAE private sector firms continued to cut jobs in September – survey

The UAE’s non-oil private sector firms reduced the their workforce in September despite posting overall growth last month, the monthly Emirates NBD survey found.

Payroll numbers across the non-oil private sector decreased for the second month running in September, the Emirates NBD Purchasing Managers’ Index (PMI ) stated.

It marked the first consecutive monthly decline in employment since the survey’s inception.

However, the rate of job shedding eased since August and was only marginal overall, the report added.

While the majority of firms reported no change in staffing in September, nearly 2 per cent of firms indicated a decline in jobs last month.

Wages were also largely unchanged last month.

Overall, the seasonally adjusted PMI rose to 55.3 in September, up from 55 in August, signalling an improvement in business conditions across the non-oil private sector.

Meanwhile inflows of new business improved during September with part of the growth driven by stronger foreign demand, which increased for the sixth month running.

While output rose, it fell to a five-month low in the latest survey.

Output charges across the non-oil private sector rose during the latest survey, following a four-month sequence of falling selling prices.

Average cost burdens rose during September, following unchanged input prices. Both average purchase prices and staff bills increased. However, the rate of inflation was only slight overall, the report said.

Khatija Haque, head of MENA Research at Emirates NBD, said: “The headline UAE PMI stood at 55.3 in September, the third month in a row with a reading at the 55-handle. This signals a steady expansion in the non-oil private sector in Q3 2018. Year to date, the PMI averaged 55.7, similar to the same period last year. Although output and new work rose sharply in September, supported by growth in export orders, employment remained below the neutral 50-level for the second consecutive month.

“Stocks of pre-production inventories were slightly higher in September after declining in August. Over the last four months, inventory levels have been unchanged on average, suggesting that firms are either much better at managing their stocks or they are reluctant to build up inventory; ie indicating softer expected demand in the coming months.

“Backlogs of work rose again in September – unsurprising given strong output and new work growth with no increase in employment – but at the slowest pace since May.”

She added: “The PMI survey data so far this year suggests to us that the non-oil sector in the UAE is growing at a similar pace to last year, when official statistics showed non-oil GDP growth of 2.5 per cent.”

The survey also found that business confidence remained strong, with 62 per cent of the firms expecting output to be higher in a year’s time. Projects related to Expo 2020, successful new product launches and planned business expansions were highlighted as the reasons for future growth prospects.