Dubai: Businesses in Dubai are offering more discounts to bring in more orders and sales, which at the end of August was running at a 38-month high. They could afford to be generous with discounts because of the lower fuel costs and a drop in inflationary trends, according to the latest S&P Global PMI update for the Dubai economy.
But businesses are not getting their hopes too high about the sales spike, instead keeping close watch on where the global economy is headed, with additional interest rate hike from the US Federal Reserve later this month. This caution was showing up in new job creation.
“Uncertainty surrounding the future outlook for both the domestic and global economy meant that hiring efforts remained subdued in August, although the rate of job creation was the quickest seen in 2022 so far,” said David Owen, Economist at S&P Global. “Business activity forecasts were only mildly positive and the second-weakest so far this year."
On the job front, "Employment was also up midway through the third quarter. The rate of job creation was the fastest seen in the year-to-date, but nevertheless still only mild and softer than the long-run trend," according to S&P Global.
57.9
Dubai's PMI for August is the highest since June 2019
Sector gains
In a repeat of what was happening in July, Dubai’s travel and tourism sector recorded sustained growth, followed by wholesale and retail (which could be explained partially by ‘Back to School’ promotions that kicked off during the month. "Recent drops in commodity prices helped to ease the burden on companies, particularly through a moderation of fuel prices," said Owen.
PMI reading
August’s PMI (Purchasing Managers Index) score – a composite one based on what businesses were spending or saving on – showed 57.9, against 56.4 in July. This made it the highest PMI reading for Dubai economy since June 2019, and ‘indicative of a marked improvement in non-oil operating conditions’. (The average score for the series is 54.5.)
Owen reckons this is about lower costs helping out. "The latest PMI data suggested that input costs at Dubai non-oil businesses had swiftly changed their direction in August, falling for the first time since the start of 2021 and at the quickest pace since the survey began almost 13 years ago." (Oil prices have eased off appreciably from the highs, and is now running at $83.5 a barrel.)
