The United Arab Emirates’ non-oil private sector expanded for a sixth consecutive month in May, though it did so at a place slightly lower than in April and employment shrank for the fourth straight month, a survey showed on Thursday.
The seasonally adjusted IHS Markit UAE Purchasing Managers’ Index (PMI), which covers manufacturing and services, edged down to 52.3 in May from 52.7 in April, remaining below the series average of 54.1.
The coronavirus crisis hit the Gulf state hard last year, both via the shock of low oil prices and the huge toll it took on vital non-oil economic sectors such as tourism.
“UAE’s non-oil private sector showed further signs of improvement in May, although growth slipped marginally from April’s recent high. New orders were largely supported by domestic sales, as latest data signalled a slight decrease in export orders,” said David Owen, economist at survey compiler IHS Markit.
Output, a measure of business activity, also expanded for the sixth straight month, but did so at its slowest pace since February, softening to 53.6 in May from 55.4 in April. It was well below the series average of 57.3.
“Employment numbers continued to disappoint in May, falling for the fourth month in a row. With backlogs starting to rise and demand strengthening, it is hoped that businesses will start to raise their staffing levels soon to support overall growth,” Owen said.
Employment expanded in only one of the past 17 months, in January this year. The contraction in May was marginal, however, and only roughly 1% of the firms surveyed reported job losses, the PMI report said.
“The Future Output Index continued to make steady gains in May, rising for the sixth month running and pointing to the highest degree of optimism since July 2020,” the report said.
But only around 14% of survey respondents expected output to rise in the next 12 months, while 84% expected no change due to continued uncertainty about the pandemic’s trajectory.
Last month, Dubai, one of the UAE’s seven emirates and a trade and tourism hub, said it would allow people vaccinated against COVID-19 to attend events like concerts and sports events.