Dubai: Business activities across the Dubai’s private sector in November is now signalling a full-fledged surge. The upturn was led by the strongest increase in new business since July 2019, as firms benefited from continued rebound in international travel and higher demand.
According to the IHS Markit’s UAE Purchasing Managers’ Index (PMI), overall activity continued to rise sharply. But confidence regarding future output has slid to a three-month low. Hiring activity was accordingly subdued, with job numbers in fact falling slightly for the first time since May.
After climbing to a two-year high in October, the seasonally adjusted IHS Markit Dubai PMI was unmoved at 54.5 in November to indicate the joint-strongest improvement in operating conditions since October 2019. The upturn was led by a marked expansion in new business for the second consecutive month, as the Expo 2020 continued to draw greater tourism activity and increased client demand following rolled back COVID-19 restrictions.
The rate of sales growth climbed to its highest in 28 months, led by travel and tourism at the sector level. 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 the previous month.
There was some evidence from survey panelists that discounts had supported new order volumes in November. The 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. Inflation remained at a three-month high.
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. However, 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. Illustrating continued business uncertainty, job numbers in the non-oil sector fell for the first time in six months in spite of robust sales growth. The overall reduction in employment was marginal.