Dubai: The UAE’s purchasing managers’ index (PMI) for September shows a sharp improvement in operating conditions across the UAE non-oil private sector economy.
The index, compiled by HSBC Holdings and Markit Economics posted a 29-month high of 56.6 in September, up from August’s 54.5.
The index is based on data compiled from monthly replies to questionnaires sent to purchasing executives in approximately 400 private sector companies in the UAE representing manufacturing, services, construction and retail.
The UAE’s non-oil producing private sector companies reported a solid rise in activity in September with the pace of expansion the highest in over two years. Order intakes increased at the fastest pace in the survey history and new export business also rose at an accelerated pace. Meanwhile, employment levels continued to rise.
The latest survey results signalled a sharp increase in activity at the UAE’s non-oil producing private sector companies. Output growth was the highest since May 2011 and largely attributed to increased new business. The growth rate of new work accelerated substantially from August to the highest in the 50-month survey history.
“It’s an extremely strong reading that shows the UAE economy continuing to build speed. Output is high and new orders from home and overseas are robust, suggesting the economy is set to maintain momentum into the year end,” said Simon Williams, Chief Economist for Middle East & North Africa at HSBC.
New business from abroad also rose sharply in September. Increased tourism and improved market conditions contributed to the latest rise in new export orders, according to the PMI survey panellists. In response to increased workloads, non-oil private sector companies in the UAE hired additional workers in September. Employment levels increased at the fastest pace in three months. The September numbers show, employment levels rose at the quickest pace in three months and survey respondents linked the rise in payroll numbers to increased workloads.
“The pick up in job creation is consistent with the positive overall trend but the rise in wages may mean that price pressures are starting to build. Given rising rents, we fear inflation will be matter of growing policy concern over 2014,” said Williams.
September data signalled a further rise in input buying input costs increased.. The rate of cost inflation accelerated to the highest in seven months. While purchase prices rose at a largely unchanged pace from August, average staff costs increased at the fastest pace since June 2011. Survey respondents attributed higher average salaries to increased living costs and performance based pay rises.
The pace of economic expansion accelerated from August and was the second-sharpest in the survey history. The increase in purchasing activity was mainly driven by higher new business, according to panel members.
According to official government estimates, the UAE’s GDP is projected to grow 4.5 per cent this year. In its latest assessment of the UAE economy, the IMF said it expects the country’s non-oil economy to expand by over 4 per cent per annum in the coming years while the Washington based Institute of International Finance (IIF) has forecast the non-oil GDP growth for 2013 at 4.5 per cent compared to 4.1 per cent last year. A recent survey of 18 economists by Bloomberg has forecast the GDP to grow 3.9 per cent.
