UAE businesses rebounded strongly in February, with increased orders and better pricing driving revenue growth and profit margins. These factors boosted the growth rate, bringing it close to December's 9-month high, according to PMI data from S&P Global.

However, the private sector experienced higher costs for the first time in seven months, which has led business owners to adopt a more cautious outlook for the remainder of the year, Gulf News reports.

“The (UAE private) sector is not without its challenges, as highlighted by a limited level of confidence in the year ahead outlook,” said David Owen, Senior Economist at S&P Global Market Intelligence.  

“Firms continue to feel the pressure of intense competition, which has capped price increases. Nevertheless, growing cost pressures resulted in a slight acceleration in selling price inflation in February.

“Additionally, businesses are eager to secure new work, which contributed to a rapid accumulation of backlogged orders,” he added.

The construction sector remains the most active, with new projects launching and developers focused on meeting project completion milestones to attract off-plan sales from new property investors.

Job creation, however, remains muted, a trend that has been evident since mid-November, according to market sources.

“While some firms hired additional workers to increase their capacity, most kept employment unchanged,” according to the S&P Global report.

If higher costs persist, businesses may be forced to reconsider or delay any planned new job additions.

“While robust growth in business activity indicates that the pipeline of orders should eventually be addressed, other factors such as weak job creation and administrative delays pose risks to this outlook,” Owen stated.

In addition, in regard to payment issues, Owen commented: “UAE firms continue to report difficulties in securing payments from clients, an issue that appears to be ingrained in the wider market and may necessitate policy action to address.”