In a major relief for job seekers, the non-oil private sector in the UAE witnessed an uptick in July as employment numbers rose, according to reports. This indicates how companies continue to bounce back from the aftermath of the war in the Middle East.
S&P Global’s UAE Purchasing Managers’ Index (PMI) rose to 52.7 in July from 50.8 in June. Since readings above 50 signal expansion, Reuters reported.
The factors that contributed to the recovery include stronger customer demand, easing regional tensions and increased client spending. As export orders grew, aided by steadier regional trade and smoother shipping, firms began rebuiding staffing after the drop of the last few months.
“July data signalled some relief for UAE companies after the PMI dropped perilously close to the 50.0 neutral threshold in June, as a restoration of business confidence and a period of smoother trade flows allowed for a pick-up in growth,” said David Owen, principal economist at S&P Global Market Intelligence.
Since May, the UAE economy had faced a slowdown due to the impact of the war, resulting in cautious client activity and competitive pressures.
Export sales also returned to growth for the first time since March, when the war began. Though the increase was minimal, it was also the strongest recorded in a year.
However, despite the improvement in activity, challenges remain as firms still battle higher input costs and supply-chain pressures. Input price inflation remained sharp, with businesses reporting higher costs for fuel, food, fertilisers, software and shipping. Staff expenses also increased at the fastest pace since February, although the rise was marginal, according to the report.
Though businesses increased their selling prices again, inflation remained mild due to tough competition. Due to imported delivery delays and shortages of some materials, inventories declined at a high rate.
Delivery times improved modestly, helped by smoother shipping movements through the Strait of Hormuz, although the improvement was weaker than in June.
