Although companies face margin constraints and a rise in costs, there is still a need to hire more staff to take advantage of new year's demand
The UAE's non-oil sector grew fastest in 9 months, but the employment market remained stagnant, according to the monthly PMI released by S&P Global on Monday. Higher demand, projects in progress, discounted prices and favourable weather conditions supported business activity in the Emirates.
The seasonally adjusted S&P Global UAE Purchasing Managers’ Index (PMI) rose for the third successive month in December, from 54.2 to 55.4, and was at its highest level in nine months.
The Dubai PMI rose from 53.9 in November to 55.5 in December to signal the strongest growth of operating conditions in nine months, led by faster expansions in output and new orders, as businesses commented on increased client demand and busy markets.
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In both cases, growth rates were stronger than those observed at the UAE level. Elevated new business growth encouraged a renewed (albeit mid) rise in employment. In contrast, inventories of inputs declined for the second month in a row.
For the third month running, it said UAE non-oil companies highlighted a reduction in output charges in December, with reports signalling further efforts to discount client fees and support sales growth. Input costs rose, although the inflation rate slowed to its softest since last March.
“The UAE saw its best expansion in non-oil business conditions for nine months in December, with the latest PMI data closing out another year of continuous growth and putting the sector in a strong position for 2025. Capacity levels remain under considerable stress, however, illustrated by another marked increase in backlogs of work,” said David Owen, senior economist at S&P Global Market Intelligence.
Non-oil companies expressed optimism about the year-ahead outlook in December, though confidence ticked down for the second month running. Notably, optimism was at its second-lowest level since early 2023.
“Recruitment appears to be the limiting factor as the pace of employment growth was barely changed from November’s 31-month low. While margin constraints appear to be holding some firms back from recruiting more staff, as charges fell despite rising costs, there is certainly a need to boost resources to ensure firms capitalise on demand in the new year,” said Owen.
Headed that purchasing growth also quickened to a 13-month high, which could help to lift inventories after a subdued trend in the second half of 2024.
Survey respondents highlighted buoyant market conditions at the end of the year, which helped them to secure new clients and larger order book volumes. Notably, the overall rise in new work was the sharpest recorded for nine months, despite a softer upturn in sales to international clients.
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