DUBAI: Growth in overall business activity in the United Arab Emirates’ non-oil private sector slowed slightly in December, but output expanded at the fastest rate in 32 months, a survey of purchasing managers showed yesterday.
The HSBC UAE Purchasing Managers’ Index, measuring the performance of both manufacturing and services, edged down to 57.4 points last month from 58.1 in November, which was the highest level since the survey was launched in 2009.
However, growth in output climbed to 60.1 points in December, the highest since April 2011. Twenty-three percent of 400 firms responding to the survey said they had boosted output. Readings above 50 points in the seasonally adjusted indexes show expansion and below 50, contraction.
“Although the headline score moderated slightly month-on-month, the December reading was very strong and leaves no doubt that the UAE economy is expanding strongly,” said Simon Williams, HSBC’s chief economist for the Middle East.
“That new orders as well as current output printed at such high levels suggests that the economy will carry its 2013 momentum into the new year. “
Growth in new orders fell slightly in December but was still the second-highest on record. Backlogs of work accumulated at the fastest pace in the history of the survey. Inflationary pressure was significant, with overall input price growth at its highest level since May 2012 and the output price index jumping to 51.8 points from 48.7.
“Inflationary pressures are clearly on the rise. Input costs and wages are beginning to pick up and the run-up in backlogs of work suggests that the economy is bumping up against capacity constraints. We expect consumer prices to rise persistently over the course of 2014,” Williams said.
A Reuters poll of analysts in September predicted the UAE’s gross domestic product would grow 3.6 percent in 2014, down from an estimated 3.7 percent in 2013, but some analysts now feel that forecast is too conservative.
Dubai’s real estate industry is expected to get a boost this year from preparations for the 2020 World Expo, after the emirate in November won the right to host the event; any further thawing of international tensions surrounding Iran could boost Dubai as a regional trade hub..
Annual inflation in the United Arab Emirates rose to 1.4 percent in November, the highest since June 2011. The Reuters analyst poll predicted average inflation would reach 2.3 percent in 2014.
Reuters
