Job creation remains slow in the UAE’s non-oil private sector although business conditions are improving, according to Emirates NBD’s latest monthly survey.
The seasonally adjusted Emirates NBD UAE Purchasing Managers’ Index (PMI) rose to 55 in December from 54.2 in November, signalling its strongest position since July.
The UAE’s non-oil sector continued to see strengthening growth momentum at the end of 2016 amid reports of improving economic conditions, the report stated.
The survey indicated sharp and accelerated increase in business activity, on the back of new export orders.
Higher new orders, improving economic conditions and marketing activities all contributed to output growth. Activity rose substantially over the month, and to the greatest extent since August 2015, the report said.
New business was aided by improving client demand and the efforts of sales teams. Meanwhile, new export orders returned to growth after five months of decline.
However, the poll also found that the rate of job creation remained modest as the vast majority of respondents – 96 per cent – opted to leave their staffing levels unchanged.
Operating capacity was sufficient to deal with current workloads despite a marked increase in new work. Backlogs of work also declined for the first time in 32 months.
Overall input prices also increased at a faster pace in December amid sharper growth in both purchase prices and staff costs.
Purchase prices have risen in three successive months, with the latest increase the fastest.
But output prices decreased in December despite the rise in costs as companies tried to secure sales in a competitive environment. Charges have now declined in each of the past 14 months.
Khatija Haque, head of MENA Research at Emirates NBD, said: “The Emirates NBD PMI indicates a solid expansion in the non-oil private sector in Q4 2016. Strong gains in output and new orders have been hard-won however, with firms continuing to offer discounts and promotions in order to secure orders.
“Overall, the PMI averaged 53.9 in 2016, well below the 2015 average of 56, reflecting slower growth last year.”