Non-oil business in the UAE improved at a “robust rate” at the start of Q4 leading to a rise in UAE employment, according to the S&P Global purchasing managers’ index.
New order growth was at the joint-sharpest level in three months and purchasing activity for firms is rising at the quickest rate since before the pandemic, leading to firms increasing headcounts and boosting UAE employment at the fastest rate since July 2016 the report shows.
The seasonally adjusted S&P Global UAE Purchasing Managers’ Index, an indicator designed to give an accurate overview of operating conditions in the non-oil private sector economy, ticked higher to 56.6 in October, from 56.1 in September, and was only just below August’s over three-year high of 56.7.
Any figure the neutral level of 50 indicates growth while one anything below that level indicates a contracting market condition.
David Owen, Economist at S&P Global Market Intelligence, said: “The UAE PMI crept back up to 56.6 in October, just shy of August’s over three-year high of 56.7, indicating that the non-oil private sector had continued to grow at a robust pace at the start of the fourth quarter.
“The upturn was led by sharp expansions in business activity and new orders, giving further evidence that domestic firms were not only weathering the global economic storms, but enjoying strong demand growth.
“The key movements in October were seen on the capacity side, as businesses responded to rising backlogs by increasing their UAE employment numbers at a faster rate.
“In fact, the pace of job creation was the quickest since July 2016. Firms also looked to stock up on inputs as they prepare work schedules to address their backlogs, leading to a rapid increase in purchasing activity that was the fastest for over three years.
“Pricing data showed that UAE non-oil firms continued to enjoy mild inflationary pressures in October. Input costs rose only slightly, helped by reductions in fuel and transport costs in line with recent falls in global oil prices.
“This meant that businesses were able to lower their output charges, although the rate of discounting eased to the softest since July.”
New orders from abroad were one area of weakness in October, however, according to the S&P Global report.
Firms saw the slowest increase in export sales since the beginning of the year amid global economic headwinds. With demand increasing sharply, firms faced additional strains on their operating capacity in October, leading to a sharp and accelerated increase in backlogs of work.
This was partly linked to existing projects and pandemic-linked shipping delays.
Businesses responded in two ways: firstly, UAE employment numbers were expanded at the fastest pace since July 2016, extending the sequence of growth to six months.
Secondly, firms sharply increased their purchasing activity in a bid to build inventories for future work. Purchases rose to the greatest extent since mid-2019, while shorter lead times contributed to a solid accumulation of input stocks.
While higher input demand led to some price pressures in October, firms noted that reductions in costs for items such as fuel, steel and transport had kept inflation mild.
In addition, UAE employment costs rose at a marginal and slower rate during the period.
Visa change boosts UAE employment hopes
New visa rules for jobseekers looking for UAE employment came into effect last month.
The new system of entry and residence is aimed at attracting and retaining global talents and skilled workers.
Eligibility criteria for the UAE Jobseeker visa has been simplified and the categories of people eligible to apply for the visa do not require a sponsor or a host.
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