UAE output and new orders increase sharply in July

The IMF is forecasting GDP output in the UAE's non-oil economy to rise this year to 4.3 per cent. Silvia Razgova / The National

Activity in the UAE's private sector picked up last month, as businesses held firm despite a wobble in some emerging markets.

Output and new orders among non-oil private companies both shot up during the month, according to the HSBC purchasing managers' index (PMI), which is seasonally adjusted to reflect the slower pace of activity in the summer months.

The data was released on the same day as two other separate surveys suggesting business confidence was on the up in Dubai, the epicentre of the private sector.

"It's another positive set of readings that shows the UAE maintaining momentum even as other more high-profile emerging markets lose steam," Simon Williams, the chief economist for the Middle East and North Africa at HSBC, said of the bank's latest data.

Headline growth in the index picked up to 54.5 points, compared to 54.1 the previous month and the 47th month in a row of improvement.

New orders accelerated during the month and demand from export markets rose at their fastest pace in six months.

Separately, a total of 93 per cent of respondents to a business confidence survey by Dubai's Department of Economic Development (DED) reported either an improvement or stability in business conditions during the third quarter.

The findings chimed with a similar survey by the Dubai Chamber of Commerce and Industry, showing 48 per cent of business leaders forecast a pick-up in conditions during the period.

"Dubai has placed considerable emphasis on aligning its business environment with the best in the world and such efforts are translated into growing confidence among businesses," said Sami Al Qamzi, DED's director general.

Combined, the data adds to a growing sense of optimism among the business community.

The IMF is forecasting GDP output in the UAE's non-oil economy to rise this year to 4.3 per cent, up from 3.8 per cent last year, helping to compensate for slower output in the oil sector.

The galloping pace of growth in other emerging markets has faltered in recent months as economies including India, Brazil, Russia and China have cooled. HSBC's PMI readings for the first three nations dropped into negative territory last month. Regionally, Egypt's reading also dipped, while Saudi Arabia's expanded.

Despite a rise in new orders and new export orders in the UAE, the rate of job creation eased last month. The majority of respondents to the survey indicated unchanged workforce numbers. Staff wages were also rising only slowly, the data showed.

In response to rising non-staff cost pressures, companies raised their selling prices during July, although only marginally.