New business growth in the UAE's non-oil sector diminished considerably in April, with new orders rising at the slowest pace since February 2023 as heavy rainfall disrupted business operations, impacted sales and caused a sharp rise in backlogs, a new survey revealed on Friday.

The seasonally adjusted S&P Global UAE Purchasing Managers' Index slipped to 55.3 in April from 56.9 in March. This is still well above the crucial 50.0 no-change mark, continuing a trend seen since December 2020.

However, the latest improvement in operating conditions was the weakest since last August, the report said.

Despite robust domestic economic conditions, April's heavy rainfall disrupted businesses, with new order growth falling as floods impacted customer demand.

"Backlogs of work increased considerably in April, which was linked to temporary business disruptions and elevated pressure on operating capacity. Non-energy businesses are nonetheless still highly upbeat about their year ahead growth prospects. Many commented on strong sales pipelines and a swift recovery from the impact of heavy rainfall," said David Owen, senior economist at S&P Global Market Intelligence.

Job creation continued to grow, albeit at a slower pace as some participants noted that strong pressures on margins had acted as a brake on hiring.

"Higher levels of employment were recorded in April, driven by new project starts and resilient demand conditions. Pressure on operating margins remained a challenge, as price discounting continued despite faster rises in purchasing costs and salary payments," said Owen.

Dubai PMI

Similarly, S&P Global Dubai Purchasing Managers' Index edged lower to 55.1 in April, from 58.0 in March and is the lowest for eight months. This was led by a sharp slowdown in new business growth.

(Writing by Brinda Darasha; editing by Seban Scaria)