UAE private sector growth accelerates but job market remains muted

The UAE saw its sharpest pace of expansion in the non-oil private sector for three months in November but job growth remained minimal, according to Dubai bank Emirates NBD’s purchasing managers’ index.

The survey, produced by IHS Markit, showed steep increases in output and new business. This resulted in the fastest growth in buying activity in the survey’s history with around 42 per cent of survey respondents noting increased quantities of purchases.

The headline PMI score for the country also increased from 55.9 in October to 57.0 in November. A score of more than 50 represents growth and less than 50 a contraction.

The latest expansion was the highest since August and marked the strongest growth rate for output in 33 months.

“The PMI reading for November confirms our view that the UAE’s non-oil sector will likely see strong growth in the fourth quarter of this year, as both households and business will likely boost purchases before VAT comes into effect at the start of next year,” said Khatija Haque, head of MENA research at Emirates NBD.

Despite positivity in some areas, foreign demand contracted with a moderate rate of decline due in part to intense competition for new work in key export markets.

Job creation was also muted due to easing business confidence and overall optimism among respondents was well below the long-run average of the survey despite positivity towards the upcoming Expo 2020 event in Dubai and domestic demand.

“The continued softness in employment and lack of wage growth suggests that any boost to household consumption this quarter will likely prove temporary,” Haque added.