Dubai business conditions remain robust

Business conditions in the Dubai non-oil economy continued to strengthen at a robust rate in September, according to the latest PMI survey data.

Activity and new business rose sharply despite momentum softening from recent peaks in August although there was evidence that the slowdown had led to weaker uplifts in staffing and inventories, the survey report said.

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David Owen, economist at S&P Global Market Intelligence, said the PMI data for September continued to signal a robust improvement in operating conditions at non-oil businesses in Dubai, thus continuing projections for the strongest quarter of growth for roughly three years.

“That said, the headline index was down from August's recent peak for the first time in five months, as rates of expansion in output, new orders, employment and stocks of purchases softened. The slowdown came amid a renewed uptick in input costs, after last month's data signalled a record drop in prices due to lower energy and fuel expenses. Nevertheless, the pace of inflation was only marginal at best, providing further relief to businesses that had suffered marked increases in costs earlier in the year,” said Owen.

After declining at a record pace in August, survey data showed input prices rising only slightly, amid evidence that weakening global demand and lower commodity prices had continued to temper inflation. The headline S&P Global Dubai dropped to a three-month low of 56.2 in September, after reaching a 38-month peak of 57.9 in August.

Businesses often commented that they were able to raise activity due to another sharp increase in new business inflows. Sector data showed that sales growth was mainly driven by wholesale & retail businesses in September, which recorded a 38-month high. Travel & tourism new business also rose sharply, although the rate of growth dropped to the weakest since January.

The survey found that while output continued to expand sharply among construction firms, new orders increased only slightly to indicate that sales pipelines may have become less robust. “Output and new order growth ease from August peaks Inventory accumulation and job creation soften Input costs tick up following record fall.”

Looking ahead, expectations for future activity at non-oil businesses picked up in September and remained in positive territory, but well below the series average. Panellists were generally hopeful that market trends will stay strong despite global challenges, driving further increases in new work and output, said the survey report.

- issacjohn@khaleejtimes.com