UAE business activity grows again in May

Private sector activity in the UAE rose to a three-month high in May as orders increased and output picked up, according to data from HSBC.

There has been a noticeable shift upwards in economic momentum in the UAE throughout the year, according to the HSBC's survey. Jaime Puebla / The National

Private-sector business activity in the UAE rose to a three-month high in May as orders increased and output picked up, according to data from HSBC.

The headline score in the bank's Purchasing Managers' Index (PMI) jumped to 55.3 last month, up from 54.0 in April.

Readings above 50 represent an expansion in activity, and the latest score was the highest figure since February.

Non-oil private companies taking part in the HSBC survey recorded increased output levels, with 22 per cent of respondents to the survey indicating growth. About 17 per cent also reported more business from abroad.

Employment was also up, with a 17th consecutive monthly increase in payroll numbers.

"We have seen a noticeable shift upwards in economic momentum in the UAE throughout 2013, and May shows that it is actually gaining pace, rather than losing it, even as the weather gets hotter and the peak tourist season passes," said Liz Martins, a senior economist with Middle East & North Africa at HSBC.

"Clearly, confidence among private sector non-oil companies remains strong and so, too, do the new orders they are receiving, both from inside the UAE and abroad."

Improving market conditions were another factor behind the rise, according to the bank.

But the news was not as good elsewhere in the region. The same index for Saudi Arabia showed a slowdown in activity.

The Saudi Arabia HSBC PMI fell to 57.3 points in May from 58.0 in April.

The UAE score may drop during July and August, according to Ms Martins, because of a seasonal downturn. That, combined with the end of the peak tourist season, could temporarily weigh on job creation.

"But overall, we think 2013 is a stronger year for the UAE than 2012 and we expect the PMI to reflect that, barring any negative surprises - such as a further drop in oil prices," added Ms Martins.