Dubai firms record robust Nov upturn

The month also saw modest increases in staffing and inventories amid slower rises in output and new orders, according to S&P Global Dubai Purchasing Managers' Index report

In November, the rate of new order growth softened to the weakest since February.

Issac John

Published: Tue 13 Dec 2022, 4:19 PM

Dubai’s non-oil companies witnessed continued upswing in business, albeit growth moderated to nine-month low during November, according to a survey released on Tuesday.

The month also saw modest increases in staffing and inventories amid slower rises in output and new orders, S&P Global Dubai Purchasing Managers' Index report said. Firms continued to see little change in their input costs and reduced their output charges, although to a lesser degree than in October.

The headline PMI index ticked lower for the third successive month in November, dropping to 54.9 from 56.0 in October. Despite easing to the lowest since April, the index was indicative of a robust improvement in the health of the sector.

"The Dubai non-oil economy enjoyed another robust expansion in November, but there are increasing signs that the latest phase of growth in the emirate has now peaked,” said David Owen, economist at S&P Global Market Intelligence.

The PMI survey that covers the Dubai non-oil private sector economy, with additional sector data published for travel & tourism, wholesale & retail and construction, dropped to the lowest since April, as output and new orders both rose at the slowest rates for nine months.

“While firms continued to enjoy increased demand, the global economic slowdown has begun to limit spending among clients, while some companies found that tight competition continued to make sales growth challenging. On the plus side, inflationary pressures have clearly softened from earlier in the year, with firms commenting that higher fuel prices were largely offset by falling supplier charges for raw materials," Owen said.

According to the survey, business activity mainly rose due to a further increase in new work, with some panellists mentioning progress on current contracts and the positive impact of sports events such as the Fifa World Cup.

Most companies reported a solid upturn in new business volumes in November, often highlighting an improvement in market conditions and new clients. The rate of new order growth softened to the weakest since February while slowdowns were noticeable in the travel & tourism and wholesale & retail categories, with the former registering the softest rise in new business for over a year, said the report.

In the first nine months of 2022, Dubai’s economy expanded 4.6 per cent year-on-year to Dh307.5 billion. A key growth driver was the hospitality and F&B sector, which outperformed all other economic activities with an exceptional 28 per cent growth in the first nine months. ‘Wholesale and Retail Trade accounted for 24.1 per cent of Dubai’s GDP during the January-September period this year, maintaining its position as the top contributor to the emirate’s economy.

In November, while inventories grew for the fourth month in succession, businesses added to their headcounts. After reaching a near three-year high in the previous survey period, the rate of jobs growth moderated slightly but was one of the strongest seen since the start of the pandemic, said the PMI report.

Businesses continued to note little change in their overall cost pressures during November as after signalling a broad stabilisation of prices in the month before, input costs rose marginally, driven by an uptick in fuel prices.

“Business confidence towards future output was positive in November and crept higher due to stronger expectations in the wholesale & retail category. Firms often cited that they expect strengthening market conditions to boost activity in the months ahead,” the report said.

— issacjohn@khaleejtimes.com