DUBAI // Private sector business activity in the UAE hit a 15-month high in October and the outlook improved further, with companies hiring new staff, a purchasing managers' survey showed today.
The HSBC UAE Purchasing Managers' Index (PMI), which measures the performance of the OPEC member's manufacturing and services sectors, rose to 53.8 points in October, its highest level since the series began, holding above the 50 point mark that separates growth from contraction. It stood at 52.6 in September.
Simon Williams, chief economist for the MENA region at HSBC Bank in Dubai, said: "This is encouraging reading that supports our view that the UAE has shifted into recovery mode.
"I don't expect momentum in the economy to build particularly quickly, and there are clear signs that the amount of spare capacity in the economy is worryingly high," he said.
In a Reuters poll, analysts raised their forecasts for UAE economic growth this year to 2.4 per cent after Dubai World sealed a US$24.9 billion debt restructuring deal, easing market concerns.
The output sub-index for UAE non-oil private sector firms hit a record high of 57.9 points in October as it booked the fastest rise since the survey began in August 2009, the PMI survey showed.
The new orders index rose to 55.6 points, an 11-month high, which panellists linked to higher order levels and further backlog depletion, the survey of 400 private sector firms showed.
The data indicated that domestic demand was firmer than external demand, as new export order growth moderated slightly from September.
Employment and buying activity both rose at moderate rates although job creation slowed on the month.
Companies faced rising cost pressure as input prices continued to climb in October, largely driven by rising raw material costs, and wage inflation accelerated slightly, the survey showed.
UAE private sector companies passed on part of the higher cost burden to customers, although output price inflation was only slight.