Output growth slows slightly, but remains sharp overall
October data signaled a slowing of output growth in the UAE’s non-oil producing private sector, while new order intakes rose sharply and new export orders increased at the quickest pace in the survey history. Meanwhile, companies lowered their charges despite rising input costs.
The headline seasonally adjusted HSBC United Arab Emirates PMI™ signalled a further solid improvement in operating conditions in the UAE non-oil producing private sector, with the headline index inching down fractionally from September’s 56.6 to 56.3 in October.
The latest survey results signalled a further increase in output, with panellists linking growth to higher new business. The pace of expansion eased to the slowest in three months, but remained sharp overall.
The UAE’s non-oil producing private sector companies reported a solid rise in order intakes during October, with the rate of growth in new work the second-highest recorded in the survey history. Good sales efforts, improving economic conditions and higher construction activity all contributed to the sharp rise, according to panel members. Meanwhile, new export orders rose at the quickest pace since data collection began in August 2009. Anecdotal evidence suggested that competitive pricing and good market conditions accounted for much of the overall expansion.
Inflationary pressures persisted into October, but the rate of overall input price inflation eased slightly from September. Driven by increased market demand, general inflationary pressures and increased raw material costs, purchase prices rose at a slightly accelerated pace, while average staff costs increased at a weaker rate. Despite rising input costs, the UAE’s non-oil producing private sector firms lowered their selling prices for the first time in five months. Survey respondents largely attributed price discounting to competitive market conditions.
Employment levels continued to increase during October as companies faced higher workloads. The rate of job creation was down slightly from that seen in September, but remained above the long-run series average. Backlogs of work accumulated for a third month in succession during October, and to a greater extent than in the previous month. Meanwhile, suppliers’ delivery times improved at the slowest pace in just over two years.
In line with the trends for output and new orders, purchasing activity in the UAE’s non-oil producing private sector increased in October. Concurrently, stocks of purchases accumulated at an accelerated pace. Some companies linked the rise in input stocks to predicted new order growth.
