Dubai: Business activity in Dubai continued to expand sharply in February according to the latest Purchasing Managers’ Index (PMI).
Dubai’s PMI in February climbed to 54.1 after easing to a four- month low of 52.6 in January, to signal a strong improvement in operating conditions in the non-oil economy. The 1.5-point rise was largely driven by the New Orders Index, with only small fluctuations seen in the other four components of the PMI.
Non-oil companies saw a sharper increase in new orders midway through the opening quarter, which was widely attributed to an upturn in client demand and a recovery in economic conditions following a brief period of disruption from the Omicron wave.
In fact, the rate of new order growth was one of the strongest seen since the start of the pandemic, beaten only by those seen towards the end of last year.
“New business growth in Dubai returned to the strong levels seen at the end of last year in February, in a promising sign that the Omicron variant has had only a minor impact on the economy compared to previous waves of the pandemic,” said David Owen, Economist at IHS Markit.
Upturn in travel
An upturn in overall sales was led by the travel & tourism sector, which posted its strongest growth since June 2019, as a fall in global COVID-19 cases prompted countries to scale back travel restrictions.
“The rebound was most notable in the travel & tourism sector which saw the fastest growth in new business since June 2019. A loosening of global travel restrictions should help the tourism industry further in the final weeks of the Expo and throughout the rest of 2022,” said Owen.
New business meanwhile rose solidly in the wholesale & retail sector, while construction firms noted a modest increase in new work.
Output levels in the non-oil private sector rose sharply over February, although the rate of expansion ticked down to a five-month low. Some panellists noted that delays in the arrival of freight shipments continued to constrain activity.
Increased travel activity and construction projects continued to underpin overall growth.
Despite the steep increases in sales and activity, efforts to boost staff capacity remained limited, with the rate of job creation little-changed from that seen at the start of 2022 and only marginal.
Slowing input costs
Data for February showed input prices and cost increases slowed down significantly. With cost inflation easing, firms lowered their output charges at a solid and much quicker pace in February. In fact, the rate of discounting was the second-fastest since September 2020.
Looking ahead, Dubai non-oil firms continued to show a modest degree of confidence in future activity. Overall sentiment picked up from January’s eight-month low but remained weak in thecontext of the series history.
