Growth in non-oil private sector activity in the UAE accelerated in May, reaching a five-month high as demand continued to be strong despite inflationary pressures, according to a survey released Friday.
Standard & Poor's Global's PURCHASING MANAGERS' INDEX , adjusted for seasonal factors, rose to 55.6 in May from 54.6 in April, up more than the 54.1 average readings since 2009.
The production sub-index also reached its highest level since December, climbing to 62.5 in May from 61.5 in April, up from an average reading of 57.5.
Standard & Poor's Global Market Intelligence economist David Owen said the readings suggest the economy "continues to recover strongly from the pandemic.""Despite the end of Expo 2020, companies continue to see higher orders and an increase in tourism, although this has been partly helped by a new decline in average prices required."
"The cost of inputs has risen at the fastest pace since November 2018, with companies widely signaling higher fuel prices as well as increasing the cost of many raw materials such as aluminium, steel, timber and chemicals," Owen said.
"At present, index data indicate that companies choose to absorb additional expenses rather than charge them to consumers, but this is unlikely to continue indefinitely."
The employment sub-index rose back to the growth zone and recorded 50.7 in May from 49.9 in April, the first time it had slipped below 50 that separated growth from contraction since May 2021, albeit marginally.
Although employment growth is also still marginal, this is the fastest pace of job creation since October.
The companies said that increased new orders and delayed replacement of staff who had left their positions had led to increased appointments.
Future production forecasts improved in May from the previous month, with about 15% of survey participants expressing positive expectations.
The sub-index for future production has been similar to the past few months, but low compared to historical levels.