Growth of the United Arab Emirates' non-oil private sector accelerated to a 34-month high in December, partly because of a rise in consumer spending to beat the introduction of value-added tax (VAT) in January, a survey showed on Thursday. The seasonally adjusted Emirates NBD UAE Purchasing Managers' Index, which covers manufacturing and services, rose to 57.7 last month from 57.0 in November. Above 50 indicates expansion and below shows a contraction.

Output growth fell sharply last month to 60.7 from 64.3 but remained strong by historical standards, while growth in new orders rose sharply to a 35-month high of 64.8 from 60.1. Employment continued to grow at the same moderate pace. "The UAE's non-oil sector expanded sharply in the last two months of the year, largely due to a strong rise in output and new orders," said Khatija Haque, head of regional research at Emirates NBD.

"It is likely that the introduction of VAT in January has spurred activity and purchasing in the fourth quarter of 2017, which is in line with our expectations. Nevertheless, employment and wage growth have been relatively muted, not just in December but for 2017 as a whole." Output price inflation was negative for a fourth straight month in December, while input price inflation slowed slightly.

Copyright Reuters, 2018