x Abu Dhabi, UAEThursday 27 July 2017

Export orders pick up pace in private sector

Export orders for UAE private sector firms expanded at their fastest rate in nearly a year-and-a-half last month.

Businesses in the UAE are continuing to grow at a faster pace than companies in other parts of the world. Pawan Singh / The National
Businesses in the UAE are continuing to grow at a faster pace than companies in other parts of the world. Pawan Singh / The National

Export orders for UAE private sector firms expanded at their fastest rate in nearly a year-and-a-half last month.

The expansion helped the non-oil private sector to remain firmly in expansion territory, according to the HSBC purchasing managers' index, released yesterday.

The headline score clocked in at 53.8, the same reading as the previous month. A score of 50 separates expansion in activity from contraction.

"The increased level of production was driven by marked growth of new orders. Anecdotal evidence linked the increase in incoming new work to greater demand, particularly in international markets," the HSBC economists Simon Williams and Liz Martins wrote in a report of the data. Employment growth picked up during the month, although the increase in staff costs was modest.

The data signals that businesses in the UAE are continuing to grow at a faster pace than companies in other parts of the world. In the euro zone, Markit's PMI fell to 45.4 last month, while a similar HSBC survey for China showed the reading slipped to 53.5.

Still, the data suggests companies are continuing to experience difficulties in some areas. While input prices rose again last month, the increase was at a slower rate than in previous months.

But output prices - how much companies charge for their goods and services - climbed more sluggishly, signalling that producer margins remain under pressure.

Saudi Arabia's PMI reading was even more robust than the UAE's score.

The kingdom's overall score came in at 59.8 last month, down slightly from the month before, but still one of the highest readings in the world.

Output and new orders indexes were even stronger, with 41 per cent of firms reporting growth in new business.

"Given the weak global backdrop, we continue to see domestic demand as the key driver of growth for Saudi Arabia," wrote Mr Williams and Ms Martins.

However, businesses also reported a rise in overseas orders during the month. The stronger external reading chimed with similar data from several other emerging markets during the month, HSBC wrote.

Unlike the UAE, output costs rose at a faster pace during the month in Saudi Arabia. Prices edged up to a 16-month high of 53.7.

"Given the combination of robust growth, fiscal and monetary stimulus and elevated global commodity prices, the uptick in output prices may be an early indicator of greater pressure on consumer prices going forward," wrote Mr Williams and Ms Martins.

tarnold@thenational.ae