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UAE job market improves as business activity rises solidly in January

Dubai - Survey finds non-oil private sector continuing to record soft growth

The UAE’s economy started 2021 on a high note as non-oil private sector business activity rose in January while new employment also increased for the first in the past 13 months.

“Businesses in the non-oil economy reported a solid expansion in activity during the month, which they associated with an increase in client sales and a resumption of construction projects. The rate of output growth eased slightly from December’s five-month high, but remained one of the quickest seen since the downturn linked to the Covid-19 pandemic,” IHS Markit said in its January report released on Wednesday.

It said there was a slight uplift in employment in January, ending a year-long sequence of job shedding. It was the first increase in employment since December 2019.

“Employment edged into positive territory for the first time in over a year, showing that firms are gaining more confidence to expand their operating capacity,” said David Owen, Economist at IHS Markit. Interestingly, employment-oriented online service LinkedIn also released its report about the UAE, highlighting top 15 categories drive the UAE job market. Some of them include specialized medical professionals, digital content freelancers, health supporting staff, e-commerce, digital marketing specialists, business development and sales roles, professional and personal coaches, creative professionals, specialised engineering roles and online news and journalism.

Soft growth

IHS Markit said the amount of new business received by UAE companies also increased in the latest survey period, in part due to higher export sales as respondents commented on rising orders from the Gulf region.

“The UAE non-oil private sector continued to record soft growth in the new year, with the PMI unchanged at 51.2 from December. Compared to the results seen throughout 2020, the latest data indicated more favourable business conditions,” said Owen.

“However, with firms still having to make up lost ground from the Covid-19 lockdown, the pace of recovery so far appears subdued,” he said, adding that “the rapid roll-out of Covid-19 vaccines in the UAE should help to restore confidence in markets over the first half of 2021, although firms were still relatively downbeat about future growth in January.”

He said employment edged into positive territory for the first time in over a year, showing that firms are gaining more confidence to expand their operating capacity.

Highlighting the UAE’s PMI index’s key points, James Swanston, economist for Mena at Capital Economics, said employment component moved up for the first time in a year as firms have grown more hopeful of prospects this year.

“If the current pace of vaccination continues, most restrictions are likey to be lifted in second quarter and pave the way for a more rapid economic recovery,” said Swanston.

Highlighting the green shoots in the economy, Mohamed Omran Alshamsi, chairman of RAK Bank, said in a statement that economy is recovering, at a gradual pace, and life returns to normalcy.

“We have been very focused on doing what we can, which is to continue running our business in the best way possible, responding and supporting our customers.”

He said economic activity in the UAE is in a gradual recovery phase as businesses return to normalcy especially the business segments catered to by RAK Bank,” said Alshamsi.

Meanwhile, IHS Markit data showed that input costs fell at the quickest rate since last April, linked to a reduction in staff costs and a softer rate of purchase price inflation. Average prices charged in the non-oil sector continued to decline at the start of the year, although the rate of discounting was the softest in the current 28-month sequence of reduction. Some firms mentioned efforts to stimulate demand, but others were encouraged by rising sales to up their charges.

— waheedabbas@khaleejtimes.com