Dubai: Growth in the UAE's private sector turned in its best performance in four months during May, helped by higher output as well as new orders taken in.
New export orders surged to the best showing in 30 months, much of which came from the other Gulf states.
The headline Purchasing Managers Index (PMI) score for May was 56.5 from 55.1 in April.
The figure was indicative of a sharp improvement in business conditions across the non-oil private sector, and one that was above the long-run average.
The positive sentiment in the non-oil private sector is now at its highest for at least six years.
Some businesses were also hiring additional staff at the fastest pace in four months.
There were other factors at work too in the May readings, not all of which could be deemed positive.
“The strong PMI (purchasing managers index) reading in May was partly due to a rebound in export orders - reflecting improved external demand conditions - as well as significant price discounting domestically,” said Khatija Haque, Head of MENA Research at Emirates NBD, which sponsors the survey of private business sentiments.
“As a result, while the headline index shows strength in activity, profit margins remain under pressure.”
On the price front, businesses reported a “reduced level of input cost inflation in May”.
Also, softer staff cost and purchase price inflation contributed to “only a modest increase in operating costs”, the survey finds.
The May data showed a further rise in backlog of work orders within the non-oil private sector.
The current phase of build-up now extends to 17 months. Firms have linked “higher levels of work outstanding to strong inflows of new business”.
