Dubai skyline, Shaikh Zayed Road, Dubai properties
General view of Shaikh Zayed Road in Dubai. Image Credit: Reuters

Dubai: The Purchasing Managers’ Index (PMI) data for October showed business growth in Dubai’s non-oil private sector strengthened in October, compared to the previous month.

The data, compiled by IHS Markit, showed the overall PMI rose from 52.6 in September to 54.6 in October, signalling a sharp improvement in operating conditions at non-oil private sector firms in Dubai.

Key to the uptick was a strengthening of new order growth, which improved for the first time in five months amid higher demand at a number of surveyed companies.

“Business conditions in Dubai strengthened at an accelerating pace in October, as the headline PMI rose for the second month running from August’s recent low. Driving the increase was a notably sharper rise in new work, concentrated on the travel and tourism sector,” said David Owen, economist at IHS Markit.

The seasonally adjusted sectoral data showed an acceleration among travel and tourism firms, while construction and wholesale and retail firms reported a weaker uplift in sales.

Panellists frequently mentioned that increased price competitiveness helped sales to rise in October. Selling charges were reduced for the eighteenth month in a row, with the pace of decline the quickest since February 2016.

In October Dubai firms reported a fractional drop in their total input costs. With the amount of new work increasing, businesses expanded their output levels sharply in October.

The upturn translated into greater hiring activity, marking the second successive rise in workforce numbers. Moreover, the rate of job creation strengthened to a 21-month high.

Dubai non-oil firms continued to build up their inventories at the start of the fourth quarter, as several panellists noted an anticipation of larger orders in the future.

The overall expansion was solid and the fastest since April. However, increased purchasing activity placed greater pressure on suppliers, with lead times improving at the softest rate since the series began in January 2010. Alongside higher demand, some respondents noted that a delay in payments to suppliers led to slower deliveries.

Dubai firms’ projections for future output improved during October, after reaching a nine-month low in September.

Most firms remained optimistic of a boost to activity, citing expectations that domestic market conditions will stabilise and drive demand higher.

Anticipation for greater activity in the run-up to the Expo 2020 Dubai was highlighted as a key reason for improving business optimism.