Employment numbers were largely stable as companies were able to lower backlogs for the sixth month running.
The UAE’s job market remained largely stable in February as output of the UAE firms expanded modestly, according to the UAE’s monthly Purchasing Managers’ Index (PMI) released by IHS Markit on Wednesday.
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“Employment numbers were largely stable in February, as unchanged sales volumes meant that companies saw little pressure on capacity and were able to lower backlogs for the sixth month running. Subdued jobs trends were also linked to expectations for output in the next 12 months which, despite improving to a five-month high, remained historically weak,” IHS Markit said in its monthly survey.
The UAE’s February PMI — an indicator designed to give an accurate overview of operating conditions in the private sector — fell from 51.2 in January to 50.6 in February to indicate a slower and only marginal improvement in business conditions.
However, new restrictions made the near-term outlook more uncertain, although the rapid rollout of Covid-19 vaccines and projected new business gains from the Expo 2020 meant that firms were generally optimistic of an improvement in the economy later in the year.
“The tightening of Covid-19 restrictions in February had a notable impact on the UAE economy. New orders failed to grow for the first time since last October, while output growth softened since the start of the year. Reports of weaker demand were largely led by those sectors that saw the harshest restrictions, although some firms on the production side were also hard-hit by customs delays and global shipping problems,” said David Owen, economist at IHS Markit.
“The return to stricter measures meant that many firms’ expectations for future output growth remained subdued in February, despite the success of the UAE’s vaccine programme paving the way for a reopening of the economy later in the year. Only six per cent of businesses gave a positive outlook for the next 12 months, with overall sentiment remaining one of the weakest seen in the series history,” added Owen.