The regional turmoil is yet to weigh on business activity, says Simon Williams, HSBC's chief economist for the Mena region.
The regional turmoil is yet to weigh on business activity, says Simon Williams, HSBC's chief economist for the Mena region.

Business activity in UAE rises to a peak



Business activity in the UAE edged to a new peak last month as private-sector commerce strengthened despite the protests across the Mena region.

Nevertheless, pricing pressure intensified during February as non-oil companies began to pass on higher costs to customers, according to HSBC's purchasing managers' index (PMI).

As a result input and output prices both accelerated at their fastest rate in the survey's 19-month history.

"The recovery is on but still slow," said Simon Williams, HSBC's chief economist for the Mena region. "The regional unrest is yet to weigh on business activity as it will take time for investment plans to adjust and for any effect on new orders."

Last month's seasonally adjusted headline PMI rose to a peak of 54.3, up slightly from 54.2 in January. The PMI has now registered above 50, the threshold for no change, for 18 months.

Next month's data should offer a clearer indication of the impact of recent turmoil in Tunisia, Egypt, Libya and elsewhere, said Mr Williams. Many companies in the UAE have trade and investment links with regional economies hampered by a paralysis of commerce because of the unrest in parts of the Mena region.

New orders rose last month at a sharp pace, with the latest increase the second-highest in the survey's history. Improvements in both domestic and foreign demand contributed to the rise, although business at home accounted for the lion's share of new expansion. More than a quarter of the surveyed companies recorded a gain in new orders compared with January, citing favourable economic conditions, company expansions and new products among drivers of growth.

To accommodate more orders, companies increased purchases of stock.

Job creation was the highest last month in four months, with 9 per cent of companies hiring additional staff. The rise represented the 19th consecutive month in which respondents added to their workforce.

Despite employment gains, the data showed few companies increased wages.

Less than 2 per cent of firms surveyed said their salary bill had increased.

In contrast, other financial outgoings during the month rose. A total of 18 per cent of firms reported rises in overall spending on inputs. Higher fuel and raw material costs were chiefly responsible for the increase.

Prices for materials as diverse as copper and cocoa have risen in recent months. To offset these increases, companies raised charges for goods and services.

"There's pressure on profit margins and on wages as the demand environment is not strong enough to feed through entirely to higher consumer costs," said Mr Williams.

As a result, the moderate increase in output costs was still not enough to raise the likelihood of a significant pick-up in inflation, he said.

Consumer prices rose 1.6 per cent in January compared with the same month last year, according to the latest figures from the National Bureau of Statisics. But the index slid by 0.27 per cent in January from December, the data released this week show.

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Company Profile:

Name: The Protein Bakeshop

Date of start: 2013

Founders: Rashi Chowdhary and Saad Umerani

Based: Dubai

Size, number of employees: 12

Funding/investors:  $400,000 (2018) 

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COMPANY PROFILE
Name: ARDH Collective
Based: Dubai
Founders: Alhaan Ahmed, Alyina Ahmed and Maximo Tettamanzi
Sector: Sustainability
Total funding: Self funded
Number of employees: 4
The specs

  Engine: 2-litre or 3-litre 4Motion all-wheel-drive Power: 250Nm (2-litre); 340 (3-litre) Torque: 450Nm Transmission: 8-speed automatic Starting price: From Dh212,000 On sale: Now

COMPANY%20PROFILE
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Company%20Profile
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The specs
Engine: 3.0-litre twin-turbo flat-six

Power: 480hp at 6,500rpm

Torque: 570Nm from 2,300-5,000rpm

Transmission: 8-speed dual-clutch auto

Fuel consumption: 10.4L/100km

Price: from Dh547,600

On sale: now 

Ovo's tips to find extra heat
  • Open your curtains when it’s sunny 
  • Keep your oven open after cooking  
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  • Eat ginger but avoid chilli as it makes you sweat 
  • Put on extra layers  
  • Do a few star jumps  
  • Avoid alcohol   
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