UAE business confidence highest since October 2021, hiring rate highest in 7 years

DUBAI: Business confidence in the UAE reached its highest level since October 2021 in May – which was also reflected in hiring figures. The number of new private sector jobs created in the UAE grew at the fastest pace since 2016. This was confirmed in the monthly PMI data on the performance of the UAE’s private sector.

Businesses took advantage of the favorable results on the operational front, with data showing price pressures subdued in May.

“The rise in new jobs and strengthening demand conditions have made companies more confident about the year ahead,” said David Owen, senior economist at S&P Global Market Intelligence. At the highest level, businesses are pinning their hopes on forecasts that demand momentum will continue to be strong.”

The UAE’s PMI (Purchasing Managers’ Index) was 55.5 in May, down from 56.6 in April. But still well above the long-term average of 54.2. Any value above 50 indicates growth, and the PMI tracks business spending, hiring trends and broader sentiment.

“Hiring activity was strong, with payrolls rising at the second fastest rate since July 2016, reflecting a strong willingness by businesses to build capacity in anticipation of continued growth,” Owen said.

Key industries reported new hiring, with construction expected to pick up after the summer. “Major developments in Dubai and Abu Dhabi will be completed soon,” said a project consultant. “The announcement of the new Palm Jebel Ali brings hope to the project space.”

Retail and restaurants continued to dominate, with both categories reporting new store openings and job creation. Expect more activity on the work front as new hotels prepare to open between now and the second quarter of 2024.

The S&P Global report noted that “expectations for next year’s activity rose for the fifth month in a row to the highest level since late 2021” as new orders arrived.

But there is a slight downside. “Nevertheless, increased inflows of new orders put significant pressure on business capacity in May, extending the current order backlog to almost two years,” the report added.

Selling prices at non-oil companies in the UAE fell further in May, “although the decline was slightly below the 31-month record set in April”. “Where charges fell, panelists often mentioned that the market was highly competitive leading them to offer lower prices to customers, while some were looking to move excess inventory.”