The monthly HSBC purchasing manager index (PMI) for the United Arab Emirates (UAE) rose in September to 56.6 points, up from 54.5 point in August, as order intakes at private companies and export businesses boom, the British bank said on Thursday.
According to the report, the index, which measures the performance of non-oil private firms based on a survey in the oil- rich Gulf state, indicated that the pace of expansion was the highest in over two years last month, as order intakes increased at the fastest pace in the survey history.
Simon Williams, chief economist for Middle East and North Africa at HSBC, called the latest survey "an extremely strong reading that shows the UAE economy continuing to build speed."
In June, the Washington-based International Monetary Fund (IMF) said it expected the UAE economy to grow by 3.6 percent this year and by 3.7 percent in 2014.
Output growth was the highest since May 2011 and largely attributed to increased new business, according to the report.
The UAE's political stability, economic diversification and global economic connectivity are supporting the bullish business climate, said the IMF.
The impact of business expansion has also been seen in the UAE' s labor market. "The growth rate of new jobs accelerated substantially from August to the highest in the 50-month survey history," said the study. The pick-up in job creation is consistent with the positive overall trend but the rise in wages may mean that price pressures are starting to build, said Williams.
Nevertheless, the expansion of the UAE private business sector was also felt on the price front. Following a trend observed throughout most of the survey history, input costs increased in September as the rate of inflation accelerated to the highest level in seven months, said HSBC.
Williams noted that price increases were mostly felt in rents which put growing constraints on corporate budgets. Dubai-based real estate service firm Asteco said on Tuesday that office rents in Dubai, regarded as the business hub of the UAE, rose by 43 percent over the past 12 months.