The UAE’s non-oil private sector sustained growth in April, despite significant rainfall – the most severe since records began in 1949 – disrupting business operations and impacting sales.
The headline S&P Global Purchasing Managers’ Index for the UAE decreased to 55.3 in April from 56.9 in March, having reached nearly a five-year high of 57.1 in February.
Though the PMI growth marked its weakest since last August, it remained comfortably above the neutral 50 mark, indicating expansion rather than contraction.
Last month witnessed a slowdown in new orders, the slowest since February 2023, attributed to heavy rainfall’s disruptive effects on business operations and sales, as per the S&P report.
Tim Moore, economics director at S&P Global Market Intelligence, commented, “April data showed robust growth across the UAE non-oil private sector, driven by strong domestic economic conditions. However, the survey indicated a notable deceleration in new business acquisition due to adverse weather, particularly impacting Dubai-based companies.”
The storm on April 16 led to significant disruptions, with flooded roads and buildings, halted transport services, and numerous business closures. Stranded individuals faced challenges at offices, Dubai Metro stations, and Dubai International Airport, where flights were cancelled.
The adverse weather also contributed to a notable backlog of work, as reported in the PMI, alongside falling average prices charged for the sixth consecutive month due to intense competition.
Despite the rain-related disruptions, respondents in the UAE highlighted resilient domestic economic conditions and long-term business expansion plans, alongside competitive pricing strategies.
The UAE continues to focus on the non-oil sector to diversify its economy, with strong economic growth expected, as stated by the UAE Central Bank.
April saw continued demand for inputs, but inventory strategies were cautious, and employment growth, although present, was the slowest since January.
Companies faced rising purchasing prices and staff costs, attributed to increasing raw material prices and efforts to offset higher living costs.
Looking ahead, optimism remained high for business activity growth, though softened slightly in April, as many companies anticipate a swift recovery from the rain’s impact.
In response to the storms, the UAE announced several support measures for affected businesses and individuals, including loan deferments, interest-free loans for small businesses, and a significant aid package for affected citizens’ homes and property.
