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UAE non-oil business activity picks up in December despite slow year

* Solid expansion in the non-oil private sector in Q42016

* New export orders rise for first time in six months

* Output prices continue to fall despite cost inflation

* Job creation remained modest in December

The year 2016 ended on a positive note for the UAE non-oil private sector as growth momentum in business activity continued to strengthen in December, new data reveals.

Expansion in the private sector was aided by improvement in economic conditions and sharp rise in output, which grew at the 16-month high rate as new orders increased markedly amid a return to growth of new export business, Emirates NBD Purchasing Managers’ Index (PMI) for the country showed on Wednesday.

Meanwhile, on the price front, a further rise in input costs was registered but output prices dropped further on the back of competitive pressures and promotional offers.

Solid expansion

EmiratesNBD PMI for the UAE climbed to 55.0 in December from 54.2 in November marking the strongest growth since July.

Khatija Haque, Head of MENA Research at Emirates NBD, said that the data indicates a “solid expansion” in the non-oil private sector in the fourth quarter of 2016.

“Strong gains in output and new orders have been hard-won however, with firms continuing to offer discounts and promotions in order to secure orders,” she said.

However, Haque added that “overall, the PMI averaged 53.9 in 2016, well below the 2015 average of 56.0, reflecting slower growth this year.”

Job creation “modest”

New business rose at a sharp pace that was broadly in line with that seen in the previous month. Improving client demand and the efforts of sales teams contributed to the rise. Meanwhile, new export orders returned to growth, ending a five-month sequence of decline, the survey said.

Backlogs of work declined for the first time in 32 months, while the rate of job creation remained modest as the vast majority of respondents (96 per cent) opted to leave their staffing levels unchanged.

The survey also said that higher output requirements led firms to increase their purchasing activity in December.