Growth in the UAE’s non-oil private sector fell to a five-month low last month, but was still higher than the 2014 average, a monthly corporate survey showed yesterday.
The seasonally-adjusted Purchasing Managers Index (PMI), which is published by HSBC and compiled by the data provider Markit, fell to 58.1 in February from 59.3 in January owing to “milder expansions in output, new orders and new export business”.
The index is based on monthly replies from purchasing managers at about 400 private sector companies from the manufacturing, services, construction and retail sectors.
An index reading above 50 indicates growth and below 50 contraction.
“Activity in the UAE’s non-oil private sector continued to rise strongly in February, helped by robust growth of new business,” said Philip Leake, an economist at Markit. “That said, the rates of expansion slowed since January. Nonetheless, the outlook for the UAE remains bright, with employment rising at a faster pace and cost pressures easing as a result of lower fuel prices.”
The fall in purchasing activity was compensated by a faster rate of job creation. Employment in the non-oil private sector rose for the 38th consecutive month in February thanks to growing output and new businesses. The rate of hiring increased to a four-month high.
The rate of purchasing price inflation fell to a four-and-a-half year low in February because of lower oil prices. The price of Brent has nearly halved since June to about US$60 a barrel on the back of an oil supply glut, weaker demand in Europe and Asia and a stronger dollar.
The UAE is forecast to report economic growth of 4 to 4.5 per cent this year, based on estimates by Sultan Al Mansouri, the Minister of Economy.
This contrasts with IMF estimates. The fund cut its 2015 UAE growth forecast, citing the impact of lower oil prices on Abu Dhabi’s energy sector.
The UAE’s economy, it said, will grow by 3.5 per cent – 1 percentage point below the IMF’s October estimate. Growth last year is forecast to have reached 4.3 per cent, according to the minister.
Mr Al Mansouri is forecasting inflation will hover at about 2.5 per cent this year, in line with estimates from the IMF.
Inflation rose last year to 3.1 per cent, its second-highest level for five years, driven by surging house prices.
dalsaadi@thenational.ae
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