Pace of business picks up



Business activity in the Emirates picked up last month after slowing for four consecutive months.

The HSBC's UAE purchasing managers' index climbed to 52.1, 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 orders combined with a small increase in the number of jobs being created helped end the stagnation.

Small companies outperformed larger firms in both output and new orders.

Data suggested 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," said Simon Williams, the chief economist for the Middle East and North Africa at HSBC. "It's encouraging … but I suspect that there may be an element of seasonality in there. August was Ramadan and it was a very hot month."

There is plenty of evidence of waning momentum, he warned.

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.

"Early in the year there was a lift in activity, perhaps because of a gain in public spending, but also because the UAE was benefiting from unrest elsewhere in the region. That momentum has now gone," he said.

Export orders have held up well so far, which means there is also further room for falls as slowing global growth feeds through.

"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," Mr Williams said.

"I'm anxious that an economy as small and open as the UAE will prove vulnerable to the increasingly serious problems afflicting the rest of the global economy."

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