The HSBC purchasing managers index (PMI) for the non-oil private sector in the United Arab Emirates (UAE) dipped insignificantly in July whereas new orders, new exports and job creation continued to expand at a solid rate, said the British bank.
The survey-based headline HSBC PMI UAE index posted at 58 during July, down just slightly from 58.2 in June. The gauge measures the performance of the non-oil non-public business sector in the Gulf state UAE, a major oil supplier. An index above 50 indicates an expanding economy and vice versa.
Simon Williams, the chief economist for Middle East and North Africa at HSBC said: “This is another very strong number for a UAE economy that’s still in the sweet spot. Prices are stable, growth is good and high readings for new orders show demand still building momentum.”
In line with the historical trend, non-oil private sector output in the UAE continued to grow during the summer month of July, said HSBC.
“The pace of growth did not match that of June’s record high, but remained sharp overall as firms ramped up output in order to meet burgeoning levels of new business,” it added. Due to stronger demand, firms continued to increase their payroll numbers in July while the rate of job creation remained solid.
Half-year results by stock-listed banks and private firms in the UAE mostly increased by double-digit rates as reported in recent weeks, confirming the positive pace of the non-oil private sector. “UAE corporates have announced a stellar set of results,” said Arjuna Mehndran, the chief investment officer at Emirates NBD, the biggest local bank in the UAE.
“Real estate developers boast a doubling of annual net income, while the average net income growth of UAE banks has been in the high teens. This should keep the market on a longer term positive trajectory,” said Arjuna.
Despite the expanding economy, companies reduced their selling prices for the fourth month in July as they sought to win customers in a competitive environment.
However, according to Dubai-based independent economist Dr. Nasser Said, a former minister of economy in Lebanon, the inflation rate in the UAE climbed above two percent in late spring, the highest level since Oct. 2012, mostly due to rising real estate prices.