Dubai: New business rises sharply again in November
Non-oil private sector firms benefit from rebound in international travel
Dubai’s non-oil private sector saw a marked increase in business activity in November, led by the strongest increase in new business since July 2019, as firms benefited from a continued rebound in international travel and higher client demand.
After climbing to a two-year high in October, the seasonally adjusted IHS Markit Dubai Purchasing Managers' Index (PMI) was unmoved at 54.5 in November to indicate the joint-strongest improvement in operating conditions since October 2019.
"The Expo 2020 continued to bring strong growth to the Dubai non-oil economy in its second month, with the November PMI remaining at its joint-highest level since October 2019, whilst new business growth picked up to the fastest for more than two years. Travel and tourism appeared to benefit the most of the three monitored sectors, with wholesale and retail also firmly in growth territory,” said David Owen, economist at IHS Markit.
Wholesale and retail also performed well, whereas the construction industry struggled with weak demand and supply side constraints.
Following the strong rise in new business, output growth across the non-oil sector was also marked in November, despite easing slightly from October's recent high.
Input purchases and stock levels also expanded. Supplier performance continued to improve, following a renewed upturn in the previous month for the first time since the start of the year.
There was some evidence from survey panellists that discounts had supported new order volumes in November. In fact, output charges were lowered at a solid pace that was the fastest since September 2020. Firms that reduced their prices cited efforts to stay ahead of their competitors and gain new customers. Companies were helped by another muted rise in input costs, though the rate of inflation did pick up to a three-month high.
"Nevertheless, there was a reluctance amongst firms to expand their employment numbers. In fact, staffing levels dropped slightly for the first time since May. This came as the outlook for future activity, whilst one of the highest seen in 2021, was subdued compared to pre-Covid trends,” said Owen.
Looking ahead, Dubai non-oil firms continued to project an increase in activity over the next 12 months, with expectations often driven by higher new work from the Expo 2020., IHS Markit said on Sunday.
That said, the degree of optimism slipped from the previous month and was weak compared to both pre-pandemic trends and the current rate of output growth, amid reports that the ongoing threat of Covid-19 kept forecasts subdued. While job numbers in the non-oil sector fell - marginally - for the first time in six months.