UAE PMI index gains as non-oil private sector improves

Dubai: Non-oil private sector companies in the UAE reported an output increase in March with the purchasing manager’s index (PMI) for January reaching 57.7, up on February’s 57.3.

The HSBC Index, put together with Markit, is based on monthly compiled data from 400 companies’ in the UAE. It is an indicator of the UAE’s non-oil economy.

The March PMI data showed that operating conditions in the UAE’s non-oil producing private sector improved at an accelerated pace. New order growth also picked up but fell short of November’s record high of 58.1. The March PMI posting is the second-highest in series history and stretched the current sequence of improvement to 55 months.

“The UAE economy is in it best condition in seven years. Output is building momentum, new orders are firm and inflation is only beginning to pick up,” stated Simon Williams, Chief Economist for Middle East & North Africa at HSBC.

Order intakes also increased, with 46 per cent of the 400 company surveyed panel reporting an increase. The increase in new work growth was the second-sharpest in the series history. New export orders also rose sharply, despite the rate of expansion easing from February’s record high. In line with trends for output and new orders, purchasing activity rose in March.

While workforce numbers increased in March, with eight per cent of the survey panel reporting higher staff levels, the rate of job creation was largely unchanged since February. Backlogs of work rose at the second-sharpest rate in the series history, which signals pressure on operating capacity in the non-oil private sector.

Overall, prices increased at a slightly higher pace in March than the month earlier. While purchases prices rose at a marginally weaker rate, staff cost inflation jumped to a three-month high. Higher prices for some raw materials was the main driver for purchase price inflation, while increased living costs saw a the jump in average salaries. Non-oil private sector companies raised their charges for the fourth month in a rose in response to increased input costs.