Stagnating job market hits UAE non-oil growth in April

Payroll numbers failed to increase for only the second time in the history of Emirates NBD’s PMI index



Non-oil growth in the UAE slowed in April due to stagnation in employment, according to local bank Emirates NBD.

Business conditions during April improved at the weakest pace in three months, with output, new orders and input stocks all increasing more slowly, the lender said.

But the main drag on the sector was the job market, marking only the second month payroll numbers had failed to increase in the history of the bank’s purchasing manager’s index.

“Growth momentum in the UAE slowed a little in April after rebounding in March. External demand remains relatively subdued, and firms appear to be reluctant to increase hiring, despite solid growth in new orders and output last month,” said ENBD’s head of Middle East and North Africa research Khatija Haque.

“The PMI data year-to-date points to slower, but still positive, growth in the UAE’s non-oil sector, which is in line with our expectation for slower real GDP growth in 2016.”

The PMI measurement, designed to give an overview of the UAE”s non-oil private sector, stood at 52.8 in April, down from a four-month high of 54.5 in March and just above a near-four year low seen in January.

Despite this, new marketing strategies and discounted prices had helped companies secure new business and activity rose, though at a slower pace than March. However, total new work was hit by lower exports for the second month in a row.

This increase, coupled with a lack of new hires, meant backlogs of work increased for the fourth straight month.

Growth of purchasing activity eased to the slowest rate in three years and rate of cost inflation also remained historically low.

This meant purchasing prices rose at the lowest rate in three months, enabling firms to cut costs.