UAE March Business Activity Improves Slightly

UAE March Business Activity Improves Slightly

Growth in business activity in the United Arab Emirates' non-oil private sector edged up slightly in March after slipping to a two-month low in the previous month, a purchasing managers' survey showed on Tuesday.

April 3, 2012 8:15 by kippreport

Growth in business activity in the United Arab Emirates’ non-oil private sector edged up slightly in March after slipping to a two-month low in the previous month, a purchasing managers’ survey showed on Tuesday.

The HSBC UAE Purchasing Managers’ Index, which measures the performance of the manufacturing and services sectors, increased to 52.3 points last month from 52.0 in February. The adjusted index remains above the 50-point mark which separates growth from contraction, the survey of 400 private sector firms showed.

“The data is still painting a picture of an economy that is stable, not one that is gaining momentum,” said Simon Williams, chief economist for the Middle East and North Africa at HSBC.

UAE firms saw output growth increase to 53.4 points from a five-month low of 52.5 in February, but new orders fell to a three-month low of 56.5 points in March, the survey showed.

Job creation across the UAE non-oil private sector gained pace in March with the latest increase the most pronounced since October 2011. However, the rise in headcounts was only marginal and below the series average.

“Employment still looks sluggish, wages flat and export demand soft. Another month of flat output prices is good news for consumers, but continues the pressure on producers who have to absorb higher input costs,” Williams said.

UAE non-oil private firms left their output prices broadly unchanged in March because of strong market competition and caution towards demand.

But last month marked two years of continuous input price inflation; the latest rise was strong and above the series trend, reflecting further increases in purchase and employee costs, the survey showed.

A Reuters poll of economists conducted in March forecast consumer price inflation would climb to 2 percent this year from 0.9 percent in both 2011 and 2010, while the UAE’s economy would see output growth slowing to 3.1 percent from the 4.9 percent rate estimated by the International Monetary Fund for 2011.

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(Reporting by Martin Dokoupil; Editing by Andrew Torchia)