UAE PMI Remains High Despite Oil Slump

        By Asa Fitch
        DUBAI--Strong new-order growth drove an improvement in business conditions for the United Arab Emirates' non-oil private sector in December, according to an HSBC purchasing managers' index reading released Tuesday.
        The high PMI reading came despite a steady decline in oil prices since last summer. U.S. oil futures have fallen from above $100 a barrel last June to around $50 a barrel this week, raising concern that oil-producing Persian Gulf countries such as the U.A.E. may be forced to trim public spending and could suffer from weaker economic growth.
        "We expect lower oil prices to weigh on the economy into 2015, but for now demand is holding up well," Simon Williams, HSBC's chief economist for the Middle East and North Africa, said.
        The December PMI reading, compiled by financial information company Markit, was 58.4, up from 58.3 in November and the second-highest mark in the five-year history of the index. Any reading above 50 indicates an improvement in conditions, measured by a survey of firms on their output, employment, orders and purchasing activities.
        A rise in new orders boosted the December PMI reading, as did production growth and more buying activity. Against this sunny backdrop, private-sector companies continued to hire new staff in December.
        While the U.A.E.'s business environment improved, cost pressures are also increasing. Input price inflation rose for the month because of a rise in purchasing costs and a modest hike in wages.
        Write to Asa Fitch at asa.fitch@wsj.com
        (END) Dow Jones Newswires

        January 06, 2015 01:22 ET (06:22 GMT)

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