Latest fiscal measure for UAE shows gains

Comment: As a barometer of the real economy of the UAE, the HSBC/Markit purchasing managers' index (PMI) is probably about as good as it gets.

As a barometer of the real economy of the UAE, the HSBC/Markit purchasing managers' index (PMI) is probably about as good as it gets.

It does not take in the crucial oil sector, of course, but as the price of a barrel of crude ultimately lies outside the country's control, the PMI is an accurate indicator of what the UAE's business leaders are doing right, or wrong.

Last month's leap in the PMI by a full percentage point to 53.5 was the best result in 10 months and leaves the economy healthily on the right side of the expansion/contraction divide. Companies are experiencing more growth, and exporting more, than they have for the best part of a year.

Against a background of the euro-zone crisis, economic sluggishness in the United States, renewed fears over Asian growth, and the Arab Spring, that is a commendable performance.

Employment has increased after a long period of inertia, and a rise in the backlog of work is a sign the economy is getting back near capacity.

A fall in business with Europe has been offset by higher trade levels with the rest of the GCC, especially Saudi Arabia. The stimulus injected into the kingdom's economy after the first wave of unrest in the Arab Spring has also benefited Saudi Arabia's neighbours, as anyone in Dubai tourism can tell you.

There are a couple of clouds on the horizon of this generally sunny outlook. The PMI statistics for the financial sector continue to show the UAE constrained by conditions in the banking sector, especially in comparison with Saudi Arabia.

And the compilers are circumspect about prospects for the rest of the year, with the Ramadan season especially difficult to predict and continuing uncertainty over the global economy.

So far in the recovery, so good. But there is still a way to go.