dubai skyline
The skyline of Dubai. Image Credit: File photo

Dubai: Dubai Purchasing Managers’ Index (PMI), an indicator of the performance of non-oil private sector economy rose for the first time in four months during September, posting at 52.6 compared with a reading of 51.7 in August.

The Dubai PMI complied by IHS Markit is derived from individual diffusion indices which measure changes in output, new orders, employment, suppliers’ delivery times and stocks of purchased goods. The survey covers the Dubai non-oil private sector economy, with additional sector data published for travel & tourism, wholesale & retail and construction.

Underlying data of the PMI showed modest improvement in business conditions at non-oil companies. New order growth at Dubai firms softened over the course of September, to indicate slowing demand. While sales increased at a solid pace overall, a number of panellists mentioned that strong competition once again limited new orders from clients.

Output volumes increased at a slower rate than those seen earlier in the year. That said, the pace of expansion was faster than in August, in part due to some firms boosting their marketing activity. Attention was also directed at reducing outstanding business, which fell for the first time since January 2016. The overall contraction was only marginal though.

Slower growth of demand led firms to lower purchasing activity in the latest survey period, marking the first curtailing of input purchases since last October. Hiring activity also remained subdued over the month, with latest data signalling a fractional rise in workforce numbers.

“The Dubai PMI remained relatively subdued in September, despite rising from the three-and-a-half year low in August. Sales growth slowed further as companies faced tough market competition, leading to another reduction in output prices. Activity growth did improve, but was still weaker than observed in the first seven months of the year,” said David Owen, Economist at IHS Markit.

For the seventeenth successive month, prices by Dubai non-oil firms dropped in September. The rate of decrease was quicker than in August, with respondents once again attributing this to a competitive market environment. At the same time, overall input prices rose at the fastest pace in six months, although the increase was only modest and softer than the series average. Higher raw material costs were reportedly behind the uptick, while staffing costs rose only fractionally since August.

With competitive pressures building and a slowdown in new order growth business optimism remain took some beating however remained strongly optimistic and above the average for the survey history. “Most firms are still optimistic that price discounting will encourage greater sales in the future, while continuing to mention the positive impact that the Expo 2020 is likely to have on the local economy,” said Owen.