Non-oil private sector business activity in the UAE slowed in May, while job creation eased, a sign that the country’s economic recovery may be starting to moderate, a survey by HSBC Holdings showed yesterday.
HSBC said its purchasing managers index, or PMI, dropped to 56.0 in May, from April’s record high of 57.5. A reading above the neutral 50 level indicates the economy is expanding. May was the first month-on-month PMI decline since November last year.
“There is still a raft of problems for the UAE economy to work through and the lower PMI print for May is a reality check for those that thought we were rushing back to the strong growth rates of earlier years,” said Simon Williams, HSBC’s chief economist for the Middle East & North Africa region.
The PMI index, the first of its kind to be published in the Gulf, was compiled with data provider Markit and based on data compiled from monthly replies to questionnaires sent to purchasing executives in approximately 400 private sector companies.
HSBC’s Williams said that despite the PMI pullback, May’s reading was a still a decent one with “the good score for new orders is particularly encouraging.” He remains convinced the UAE’s recovery is well underway.
“We continue to look for non-oil growth of around 3%t this year, with the economies of both Dubai and Abu Dhabi expanding year on year,” said Williams.
HSBC said purchase price inflation moderated in May, but remained sharp with 26% of panelists registering a rise in purchasing costs. Anecdotal evidence suggested that greater fuel, raw material and freight costs drove the latest increase, it added.
The investment bank said employment in the sector has risen throughout the 22-month history of the PMI series, although the latest round of job creation was the mildest since January.
UAE’s non-oil job, output levels surge
While the UAE's non-oil producing private sector reported the fastest rise in employment levels in two years and a further boost in output levels during April, the rate of increase in new orders ease
Kuwait budget surplus may hit $52 billion
Kuwait is likely to have recorded another massive surplus during the last financial year of up to KD15 billion ($52.8 billion) as the price of Kuwait Export Crude (KEC) averaged $107 per barrel for