The UAE’s private sector shrugged off lower oil prices and rising salaries to record the highest levels of business activity in five years last month, according to the latest economic data.
HSBC’s headline Purchasing Managers’ Index (PMI) rose sharply to 61.2 in October.
Index figures above 50 represent an improvement in business conditions, with figures below 50 representing a falling off.
The 3.6 point monthly increase in the headline index represents the largest monthly rise in the survey’s history. The index is calculated from monthly input provided by purchasing executives at about 400 companies across the country’s non-oil private sector.
Four of the PMI’s five components – new orders, output, employment and stock of items delivered – posted record highs in October, the exception being suppliers’ delivery times.
Mirroring the rise in business confidence and activity was a rise in pay inflation for the fifth successive month, together with the fastest month-on-month rise in average purchase prices since March 2012, the survey found.
Year-on-year inflation across the UAE increased to 2.9 per cent in September, its highest level since March 2009, and is expected to increase to 3.5 per cent next year, according to forecasts from National Bank of Abu Dhabi.
“The pick-up in price pressures captured in this data is of concern but the dominant story is one of a UAE economy in full growth mode,” said Simon Williams, the chief economist for the Middle East and North Africa at HSBC.
“The performance is all the more impressive given the decline in oil prices over the same period, and the continued downturn in emerging markets elsewhere.”
Meanwhile, Saudi Arabia’s PMI fell to 59.1 per cent in October from 61.8 per cent the previous month, dragged down by reduced contributions from new orders, output and stocks of purchase components.
While purchasing managers in the kingdom said that new orders continued to rise markedly, there were reports that both domestic and external demand was rising more slowly than in previous months, according to the survey.
jeverington@thenational.ae
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