The non-oil private sector business activity in the U.A.E. expanded in August at the fastest pace on record as the country generated sharp gains in output and new business, a purchasing managers' survey by HSBC said on Wednesday.
The HSBC U.A.E. Purchasing Managers' Index jumped to 58.4 points in August from 58.0 in July at the highest pace since the series began in August 2009. The seasonally adjusted index, compiled by HSBC and Markit Economics, is a composite indicator of U.A.E.'s non-oil economy. It measures the performance of the manufacturing and services sectors. If the index remains above the 50-point mark, which separates growth from contraction, the business activity is deemed robust.
In August, companies in the U.A.E., buoyed by increased new business, hired additional workers. The rate of job creation remained solid, and in line with the previous month, the survey report said. The month also saw output growth accelerating to 62.2 points from 61.6 points in July. New orders growth picked up to 66.4 points in August, the highest rate since November 2013.
Simon Williams, chief economist Middle East and North Africa at HSBC, said the PMI data only strengthened the bank's expectation that the economy would continue to perform well over the remainder of the year and into 2015. "Risks may be starting to rise, but for now this is a boom in full flow.”
Growth in new export orders quickened to 64.0 points, the highest level since the series began in 2009. Job creation across the U.A.E.'s non-oil private sector remained at 53.4 points in August, the report based on a survey among 400 non-oil non-public firms said.
Output prices rebounded after falling for four months, with the index up at 51.0 points in August from 49.5 in July. The rate of input price inflation quickened to 56.0 points, the highest level since May 2012.
The report observed that across the U.A.E., inflow of new businesses and payroll numbers increased solidly. "Export volumes were at record high. Payroll numbers increased solidly again, while backlogs rose for the fourth month in a row,” the report said.
As new orders rose in line with a sharp expansion in output, the pace of expansion accelerated to the second highest recorded in the series history. The survey linked new order growth to improved economic conditions.
According the survey, input costs increased further in August, with the rate of inflation the highest since May 2012. Purchase prices and staff costs both rose, with panellists reporting that higher market demand and increased raw material costs accounted for most of the rise in purchase prices.
As a result, the U.A.E.'s non-oil producing private sector companies increased their charges for the first time in five months during August. Price rises were mainly linked to increased input costs.