DUBAI (Reuters) – Activity in the United Arab Emirates’ non-oil private sector grew in December due to increased sales and export demand, but the rate of increase was mild and employment continued to fall, a survey showed on Tuesday.
The seasonally adjusted IHS Markit UAE Purchasing Managers’ Index (PMI), which covers manufacturing and services, rose to 51.2 in December from 49.5 in November, going above the 50.0 mark that separates growth from contraction for the first time since September.
Output returned to expansion and new business also rose, with anecdotal evidence linking it to higher demand from abroad, particularly from Gulf countries, and to the continued offering of price discounts.
New export orders grew at the strongest rate in 15 months, according to the survey.
Despite this, firms continued to shed jobs, in a sign that the coronavirus crisis – which has hit important sectors of the UAE economy such as tourism and transportation – continued to weigh on overall economic activity.
The PMI employment sub-component fell to 47.7 in December from 48.8 in November.
“The jobs market continued to act as a drag on the sector, as employment fell again at the end of the year,” said David Owen, economist at IHS Markit.
“Moreover, the rate of job shedding quickened, as cash flow shortages meant some firms were unable to pay for new staff.”
Some staff cuts were due to employees relocating to other regions, the survey compilers said.
Firms’ expectations remained subdued, despite hopes of an improvement in global economic conditions. The future output index ticked up from a record low in November, but most companies forecast business activity to remain flat this year.
Reporting by Davide Barbuscia; Editing by Hugh Lawson