Growth accelerated to near record high even though UAE stock markets plunged during June
Business activity growth in the United Arab Emirates' non-oil private sector rebounded to near a record high in June, a purchasing managers' survey showed on Thursday, as output rose at the fastest pace in the history of the series.
The HSBC UAE Purchasing Managers' Index, which measures the performance of the manufacturing and services sectors, rose to 58.2 points in June from 57.3 in May. It was just below a peak of 58.3 points hit in April, which was the highest level since the survey was launched in August 2009.
The adjusted index remains above the 50-point mark which separates growth from contraction, the survey of 400 private sector firms showed.
Growth accelerated even though UAE stock markets plunged during June, with Dubai's main index tumbling 22 percent, as a speculative bubble burst and investors were forced to abandon leveraged positions. The PMI reading confirmed that the losses were having little effect on the real economy.
"The UAE boom continues to gather pace. Output is rising quickly, new orders are strong, and the labour market is in rude health," said Simon Williams, chief economist for the Middle East and North Africa at HSBC.
"There is clear evidence in the data that...inflationary pressures are rising quickly, but for now, those pressures are being contained, leaving the UAE ending the first half of the year on its strongest footing in six years."
UAE firms saw output growth accelerate to a record 63.3 points in June from 61.0 in May.
New orders growth picked up to 65.5 points from a nine-month low of 64.4, while growth in new export orders jumped to a record high of 63.2 points. Employment creation across the UAE's non-oil private sector eased marginally but remained in positive territory.
Output prices dropped for the third month in a row, with the index up slightly at 49.3 points in June after 49.0 in May. But the rate of input price inflation quickened to 55.8 points.