UAE Businesses Grapple with Backlogs After April 16 Rains

03 May, 2024

UAE Businesses Grapple with Backlogs After April 16 Rains

The UAE's private sector experienced continued growth in April, but it faces challenges stemming from the unprecedented rainfall on April 16, the most significant in 75 years. S&P Global PMI data revealed a substantial increase in work backlogs due to temporary disruptions and strain on operating capacity.

Tim Moore, Economics Director at S&P Global Market Intelligence, noted the rise in backlogs despite businesses' optimism about future growth. Job creation in the private sector increased, primarily driven by new projects and resilient demand conditions.

However, operating margins faced pressure as businesses continued price discounting despite rising purchasing costs and salaries. The April PMI score indicated further expansion but also highlighted hurdles such as a slowdown in new order growth, attributed partly to the rainfall's impact on customer demand.

Despite faster increases in purchasing prices and staff costs, businesses decreased average prices charged, aiming to stimulate sales amid competitive market conditions. This balancing act reflects ongoing efforts to navigate challenges, including cost inflation driven by factors like the Red Sea crisis and the need to offset higher living costs for employees.

Overall, while facing obstacles, UAE businesses are poised for a swift recovery, leveraging strong sales pipelines and continued growth prospects despite the aftermath of the April rainfall