Abu Dhabi – Mubasher: The UAE’s non-oil private sector dropped to its lowest level since October 2016 in February, pressured by slower growth in new orders coupled with a steep decline in employment, a recent survey sponsored by Emirates NBD and produced by IHS Markit revealed on Tuesday.

The headline seasonally adjusted Emirates NBD UAE Purchasing Managers’ Index (PMI) fell to 53.4 in February from 56.3 in January. 

Challenging market conditions and competitive pressures led new orders to rise to the least extent since October 2016, the survey said.

Employment in the UAE’s non-oil private sector plunged to 47.5 in the second month of 2019. 

“Some firms reported operating with the minimum level of staffing in a bid to keep costs down. Staff costs were broadly unchanged last month, again reflecting a relatively soft job market,” Khatija Haque, head of MENA Research at Emirates NBD, said.  

Selling prices fell last month at the fastest rate in the survey history on a seasonally adjusted basis on the back of usual promotions offered during February, while input cost inflation was only marginal, the survey said.  

“Efforts to limit increases in operating expenses were generally successful as both purchase prices and staff costs rose only marginally. This allowed companies some leeway to reduce their selling prices, which they did to the greatest extent in nine-and-a-half years of data collection,” according to the survey.

Regardless of a sharp slowdown in new order growth, backlogs of work increased at a marked and accelerated pace in February.

“Backlogs of work outstanding increased at the fastest rate since June last year. This partly reflects lowers employment, but some firms have also reported that delays in receiving payments from customers have led to delays in completing projects, which would then be reflected in higher backlogs of work outstanding,” Haque added.

February reading indicated that businesses were less upbeat about their future output than in January as around half of surveyed firms projected their output to be higher in a year’s time, compared with nearly 70% in the first month of this year.