12 May 2016
The majority of small and medium-sized enterprises (SMEs) in the United Arab Emirates (UAE) reported an increase in orders during the first quarter of 2016, but many are reluctant to hire more staff while issues collecting payments continue to be a hindrance, according to a new survey released on Thursday.

The latest SME Sentiment Survey, based on around 200 respondents in the UAE and published by Gulf Finance Corporation, reported that 62 percent of respondents said they had experienced a rise in orders during the first quarter of 2016.

While this was a rise of 25 percent compared to the previous quarter, it is still below the previous high of 84 percent, which was recorded during the first quarter of 2015. Looking forward the outlook for good, as 78 percent said they expect order growth to continue to grow in the second quarter of 2016.

"The UAE's SME market appears to have weathered the trading difficulties it faced towards the end of 2015. Our Q1 2016 SME Sentiment Survey has signalled a cautious return to growth and a more positive outlook on revenue and sales," David Hunt, chief executive officer of Gulf Finance Corporation, said in a press statement.

While order growth is recovering, SMEs reported that late payment was still an issue. A quarter of respondents said it had gotten harder to collect payments and 51 percent said it had gotten more difficult in the first quarter of 2016 compared to the previous quarter.

Late payment issues, combined with tightening liquidity making it more difficult to raise funds, the survey found SMEs were generally reluctant to increase their staff headcounts to take advantage of the increase in orders.

The survey found 58 percent of respondents said they had kept staffing levels the same during the quarter and 82 percent said they would not be hiring any new staff in the second quarter of 2016.

"We are not out the woods yet. Appetite for recruitment remains weak amongst SMEs. The good news though is that almost no companies plan to decrease their staff numbers. So while business may not be booming, it is staying at a level that does not require layoffs," Hunt added.

While investment was not being put into new staff, SMEs were looking to technological solutions and 47 percent of respondents said they plan to invest in new infrastructure during the second quarter of 2016.

(Writing by Shane McGinley)

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