Jobs galore as UAE business activity continues to soar
HSBC PMI data for the UAE’s non-oil private sector economy signalled a sustained improvement in business conditions in December. Production growth ticked up from the previous month to the second-highest in the series to date, underpinned by a substantial increase in new orders.
Subsequently, staff numbers continued to rise in December, continuing the trend observed since December 2011. Overall input prices rose, signalling ongoing cost pressures, while prices charged remained just in growth territory.
The survey’s headline figure is the HSBC UAE Purchasing Managers’ Index (PMI) – a composite indicator designed to give a single-figure snapshot of operating conditions in the non-oil private sector economy.
The PMI remained well above the neutral threshold in December, posting at 58.4 and little-changed from November’s reading (58.3), signalling a sustained improvement in business conditions in the UAE non-oil producing economy.
In line with the expansions in production and incoming new orders, non-oil private sector firms in the UAE continued to hire staff in December. Despite growth slowing slightly from the previous month, the latest increase in payroll numbers was strong in the context of historical data.
The PMI is derived from indicators for new orders, output, employment, suppliers’ delivery times and stocks of purchases. Readings above 50 indicate an overall improvement in business conditions, below 50 an overall deterioration.
Continuing the trend observed since February 2010, non-oil private sector output in the UAE rose in December. Furthermore, the rate of expansion increased from the previous month to a sharp pace. The latest rise in output was supported by marked increases in new business from both domestic and international markets.
New orders have risen in every month since the survey began in August 2009. Meanwhile, growth of new export orders reached a four-month high in December. Anecdotal evidence attributed the latest rise in international demand to success in gaining new foreign clients and good market conditions.
Subsequently, buying activity rose sharply in December, with the rate of expansion ticking up from the previous month. Stocks of pre-production goods remained in moderate growth territory, with panellists commenting on future expectations regarding increased business activity and new order growth.
Pressures on capacity at companies in UAE’s non-oil private sector economy remained, however, as evidenced by a further build-up of backlogs during the month.
Cost pressures remained at UAE’s non-oil private sector firms in December. Overall input price inflation rose in December, supported by a sharper increase in purchasing costs and modest wage growth. Output charges, meanwhile, stagnated in December, with the latest rate of inflation slowing from the previous month to only a weak pace.
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