The HSBC purchasing managers index ( PMI) for the United Arab Emirates (UAE) published Monday signaled for the month of October the fastest non-oil output growth rate in four months while price inflation remained marginal.
The HSBC UAE PMI, which measures the performance of the Gulf state's non-oil private sector, stood at 53.8, unchanged from September. Furthermore, the PMI was above the series average of 52. 7, which indicated a solid improvement overall, said the bank's monthly report.
"It's another solid reading that shows the UAE economy continuing to perform well, despite the poor global environment," said Simon Williams, chief economist at HSBC Middle East.
The increased level of production was driven by marked growth of new orders, the HSBC report said. "Anecdotal evidence linked the increase in incoming new work to greater demand, particularly in international markets."
According to the report, despite the bank's positive judgement of the UAE economy, the inflationary environment remained modest at the same time, and it pointed out that the UAE faces a paradox.
"As has been the case in each month since February, UAE non-oil private sector firms reported larger purchaser prices and staff costs during October," the report said. "However, the latest increase was only marginal, and the joint-weakest (with April) in the current sequence of inflation. Highlighting the weakness in the rate of wage inflation, close to 97 percent of panelists recorded no change in average salaries during the month."
The UAE is composed of seven sheikhdoms, of which Abu Dhabi harbors 7 percent of the globally known oil reserves. The emirate of Dubai, on the other hand, has established itself as the Gulf region's top business and trade hub as it hosts the region's largest container free port.
"We have no breakdown between Dubai and Abu Dhabi in the data," said Williams, "but I suspect the former is outpacing the latter at present."
Recent studies released by Citigroup last week also came to the conclusion that Dubai is the driving force behind the UAE's current economic strength, due to solid growth in trade, real estate and tourism, representing the three largest pillars of UAE non-oil growth.