Dubai: New job creation among UAE businesses was ‘subdued’ in March, and in fact recording the weakest showing over the last 3 years. Most businesses are showing a preference to keep their workforce numbers at the same levels rather than go for major additions.
It comes as demand growth in the UAE private sector recorded a minor slowdown during March.
“While business conditions improved at a solid pace, the upturn was the weakest recorded since September last year as demand growth showed signs of softening,” says the latest monthly PMI reading from S&P Global.
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Some sectors have indeed gone in for a rethink on their workforce numbers, and in some cases, deciding to offshore some of their operations.
“Hiring remains a significant concern, with March’s employment increase marking the weakest growth in nearly three years,” said David Owen, Senior Economist at S&P Global Market Intelligence.
“Given the elevated demand levels, this suggests that some firms could be struggling to locate suitable candidates.”
Retain profit margins
UAE businesses are also showing a concerted effort to protect their operating and profit margins, which saw some of them raise their prices at the ‘second-fastest pace in over seven years’. “This occurred despite a moderation in input cost pressures,” says the S&P Global report.
A lot of change will show up from this month onwards as the new US tariffs – and the way they are shaking up global markets – have a say in how it impacts business activity and demand in the UAE and the wider Gulf. (The new US tariffs for the UAE is set at 10%.)
“Some (UAE) companies are still grappling with backlogs due to widespread delays in customer payments, something which the UAE’s move towards a mandatory e-invoicing system is aiming to resolve,” said Owen.
“A third consecutive month-on-month softening of new order growth shows that some firms could be encountering challenges in meeting their sales targets.”
What’s March PMI score?
For March, the UAE Purchasing Managers Index (PMI) score dropped to 54 from 55, which is a ‘slower but solid improvement’ in private sector performance. But having reached a 9-month high at the end of last year, the PMI is now at its lowest level since last September, S&P Global notes.
Any score over 50 suggests businesses are in expansion mode. The PMI score is based on multiple inputs, including spending plans by companies, hiring, order levels, inventory, etc.
In March, “UAE businesses continued to highlight a steep rise in backlogs of work,” the S&P report adds. “Panelists often cited delays in input arrivals and client payments.
“Although vendor performance improved in March, it did so at the softest rate for almost a year.”
As the world and businesses recalibrate after the US tariffs, there will be a lot of effort that UAE private sector entities need to put in place to be in step with the times.
