The UAE’s non-oil private sector witnessed an 11-month surge in business activity in May on strong demand and output growth, HSBC’s purchasing managers’ survey revealed on Tuesday.
The survey for May found a sharp rise in volumes of incoming new orders as output continued to increase, but at a slower pace than sales, the bank said.
The HSBC UAE Purchasing Managers’ Index, which measures the performances of the manufacturing and services sectors, rose to 53.8 points in May from 53.5 in April.
“It’s a good reading and, given the weakness PMIs are showing elsewhere in the world, the pickup in the new orders and employment scores is particularly encouraging,” HSBC chief economist for the Middle East and North Africa Simon Williams said. Output growth at companies eased to 54.8 points in May from a 10-month high of 55.4 in April. But new orders advanced to an 11-month high of 59.1 points. Employment across the UAE’s non-oil private sector rose for a fifth month in a row, and at the sharpest pace since July, the survey showed.
Rises in both salaries and purchasing costs led to a sharp increase in overall input price inflation to 57.0 points in May from 55.8 in the previous month. The bank’s upbeat survey results came amid fresh data showing on Tuesday that the GCC economies would grow exponentially in the next 12 months.
UAE Minister of Economy Sultan bin Saeed Al Mansouri on Monday said the country was targeting a three per cent growth in gross domestic product after posting 4.2 per cent growth in 2011.
The Federation of GCC chambers of commerce and industry said the GCC’s GDP is projected to grow by around seven per cent in current prices this year while real growth is expected at 4.6 per cent.
Full Circle Investments, or FCI, an independent strategy consulting and corporate finance advisory firm based in Dubai, said its survey showed that GCC business leaders are more confident of growth than their global peers and this is reflected in their rise in investment.
The FCI survey showed that 67 per cent of the GCC’s business leaders are in agreement that things are now much brighter and moving speedily in the right direction. The measure of the interest in investing is reaffirmed by the fact that they are confident of growth in the global economy versus an average of just 40 per cent of global corporate leaders.
“This attitude is further strengthened by the data in which as high as 90 per cent are convinced that the GCC economies will grow exponentially in the next 12 months. The optimism is echoed in their belief that where corporate growth is concerned, 86 per cent stressed that they are ‘very confident’ or ‘confident’ of their own company’s growth in the next 12 months,” FCI said.
“Our survey has highlighted that a healthy amount of decoupling exists in the GCC region which is poised to enter into a renewed period of growth that has the potential, this time round, to catapult certain regional companies on to the global stage,” FCI founding partner Ghassan Medawar said.
HSBC’s survey indicated that market conditions were relatively buoyant, with advertising, promotional work and good marketing all reported to have supported efforts to win new contracts during the latest survey period. The survey’s findings implied that the domestic market was a key source of new orders in May. Export sales continued to rise, although with some reports of a slower global economy, the rate of growth was slightly weaker.