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Tue 4 Sep 2018 02:07 PM

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UAE private sector jobs growth slows to lowest rate since 2009

Emirates NBD survey shows UAE private sector performance fell to a five-month low in August

UAE private sector jobs growth slows to lowest rate since 2009

Employment in the UAE’s non-oil private sector was the slowest in August since 2009, according to the Emirates NBD Purchasing Managers’ Index (PMI).

Due to the slowdown in employment, the UAE’s PMI fell to a five-month low in the same month, the survey showed.

“The decline in the headline PMI to 55.0 in August from 55.8 in July was largely due to a decline in average employment - the first time this has been recorded since the survey began in August 2009 - as well as lower stocks of inventories,” according to Khatija Haque, Head of MENA Research at Emirates NBD.

While a softness in employment had been apparent since 2016, it appears to have slowed even further this year.

Nevertheless, the report saw strong reported growth in output and new orders in the private sector over the same period, with the output index rising to 63.1 in August. New work grew at a slower rate last month at 57.1.

Moreover, new export orders rose in August but also at a slower rate than in July, with firms highlighting strong demand in neighbouring GCC countries.

Haque said the lack of job creation year-to-date is likely due to cost control and efficiency measures implemented by firms in the face of a sustained squeeze on margins.

Although input costs remained the same month-on-month in August, and selling prices dropped on average, they have been rising over the last few years. The same month saw output prices decline again, however, for the fourth month in a row.

While activity in the non-oil private sector is growing at a similar rate to last year, due to margin pressures on firms, growth in new work and output is not translating to job creation or higher wages, the survey showed. As a result, private consumption is unlikely to greatly contribute to GDP growth in 2018. Government spending and investment, as well as net exports, are likely to be the engines of growth, according to Haque.