Growth of the business activity in the private sector in UAE slowed to a 15-month low in August, according to the HSBC UAE Purchasing Managers’ Index (PMI).
The index, which measures the performance of the Opec member’s manufacturing and services sectors, dropped to 50.9 points in August, the survey of 400 private sector firms showed.
The PMI had reached 57.5 points in April, which was the highest level since the series began in August 2009, with 50 marking the point which separates growth from contraction.
The global financial crisis and a local debt crisis led to the shelving of projects worth billions of dollars in Dubai, dragging down the economy. Concerns about the debts of Dubai’s state companies have eased after Dubai World sealed a deal to restructure almost $25 billion of debt a year ago, although uncertainty remains over the emirate’s ability to repay its debt over the next two years.
Global growth in services came to a virtual standstill last month as new business all but dried up, adding to fears that the world economy is facing another recession.
Job creation in the UAE has cooled sharply since a series’ record in April, but non-oil private sector companies continued to hire new staff in August citing business expansions and expectations of stronger market demand.
New orders for UAE non-oil private sector companies hit a one-year low of 53.5 points in August. This was reflected by firms’ output levels, which were unchanged on the month for the first time since the series began in August 2009, the survey showed.
Annual consumer price inflation in the UAE, the second largest Arab economy, eased to a three-month low of 1.3 percent in July.
The UAE, the world’s No.4 oil exporter, became an investor safe haven over past months with protests sweeping through much of the Arab world, including nearby Oman, Bahrain and Yemen.
Analysts polled by Reuters in June expect the UAE economy to expand by 3.7 per cent this year after a 1.4 per cent rise in 2010.