The seasonally adjusted S&P Global UAE Purchasing Managers' Index rose to 55.4 in July from 54.8 in June
DUBAI - The United Arab Emirates' non-oil private sector grew at the second fastest pace this year in July as business activity surged amid strong demand and increased sales amid some discounts, a business survey showed on Wednesday.
Seasonally adjusted, the Global S&P Purchasing Managers' Index in the UAE (PMI) rose to 55.4 in July from 54.8 in June, slightly below the May figure of 55.6 - the fastest growth rate this year. It has remained well above the series average since 2009 - 54.1.
The output sub-index rose to 62.5 from 60.7 in June, which is the highest for the year and above the series average of 57.5.
"UAE non-oil companies started the third quarter on a stronger basis, according to the July PMI data," wrote David Owen, economist at S&P Global Market Intelligence, the compiler of the survey.
"With increased demand, operating capacity came under pressure, but businesses responded to this reduction by continuing their recruitment efforts."
The employment sub-index fell to 51.0 in July from 51.2 in June, remaining below the average for a number of 51.3. The sub-index expanded for 14 consecutive months, with the exception of April.
"The biggest problem faced by non-oil companies in the UAE is inflation. Although the latest results point to a softer increase in total input costs, the growth rate was nevertheless the second-highest in four and a half years amid global resource shortages and rising prices for fuel, materials and delivery," Owen said.
"Once again, firms have decided to take on the additional burden of costs and reduce their prices in accordance with the intense competition for new work. However, the discount rate decreased and was only insignificant, which indicates that some firms may be ready to raise their tariffs in the coming months."
Sentiment about output next year among the firms surveyed fell to a 10-month low.