x Abu Dhabi, UAEThursday 27 July 2017

Confidence grows in UAE economy

Small businesses outperformed medium and large-sized firms as UAE private-sector activity picked up last month.

Small businesses outperformed medium and large-sized firms as UAE private-sector activity picked up last month.

HSBC's UAE purchasing managers' index climbed to 52.1 in September, up from August's 15-month low of 50.9 - signalling a "moderate" improvement in the health of the non-oil private sector.

A sharper rise in new order combined with a small increase the number of new jobs being created helped break the stagnation.

Small companies outperformed larger firms in both output and new orders. Data suggested that both domestic and external demand contributed to the increase in new work, which led to a "fractional" increase in job creation.

"It's good to see a pick-up in the headline index after four consecutive months of decline, particularly as the gain was driven by strong growth in new orders," says Simon Williams, Chief Economist for Middle East and North Africa at HSBC.

But there is plenty of evidence of waning momentum, he warns.

Readings for employment and wages remain weak and the overall pace of improvement was still more sluggish than in the first half of the year.

"Only five per cent of firms reported lower orders from abroad in September, suggesting that there may be some catch-up effect going forward, as slowing global growth feeds through to lower demand," adds Mr Williams.