Dubai’s business sector started the new year on an upbeat note with its outlook for the next 12 months brightening, signifying a faster rate of hiring and job creation.
In December, Dubai’s non-oil private sector posted its best performance for 16 months as companies continued to report rapid improvements in sales and activity, the latest purchasing managers’ index (PMI) survey shows.
“The Dubai non-oil economy ended 2023 on a high according to PMI results as the headline index rose to a 16-month peak and indicated a substantial improvement in business conditions in December,” said David Owen, senior economist at S&P Global Market Intelligence.
“With confidence and sales improving, non-oil companies raised their workforce numbers further in December, citing efforts to expand operations and fulfil output requirements. Job creation quickened to a four-month high and was broadly in line with the series average,” said the report.
The increased momentum in non-oil business activity was aided by softening cost pressures which allowed firms to offer greater discounts to customers. As a result, new order growth accelerated to the second-quickest since mid-2019, S&P Global Dubai PMI survey shows.
The data signalled a recovery in business expectations towards the year-ahead outlook at the end of 2023. The level of optimism was one of the strongest recorded since before the Covid-19 pandemic.
Owen said firms enjoyed a rapid increase in new work, the second-quickest since the middle of 2019, confirming the strength of market demand across the emirate as we enter the new year. “The improvement led to a modest pick-up in business expectations, following a decline in November when firms cited intense price competition as a noteworthy risk for 2024. Competition for market share is still a concern, with survey members indicating that this is partly driving a fall in selling charges. Nevertheless, the softening of cost burdens in December should help to limit margin pressures.”
The long-term business outlook for Dubai has never been brighter after the rolling out of an ambitious 10-year $8.7 trillion economic plan aimed at turbocharging trade, foreign investment, and its place on the map as a global hub.
As per the blueprint, Dubai will rank as one of the top four global financial centres with an increase in FDI to over Dh650 billion over the next decade while over 300,000 global investors will be helping to transform Dubai into the fastest-growing global city.
The plan, unveiled in 2023, not only aims to double the size of its economy but also seeks to bring private sector investments to Dh1.0 trillion in the next decade, up from Dh790 billion in the previous decade. The plan envisaged Dh100 billion in annual contributions to the economy from digital transformation projects.
While stronger demand drove an uptick in confidence towards the next 12 months and a faster rate of hiring, inventory growth stayed robust, but slowed amid logistical challenges. The headline S&P Global Dubai PMI rose to 57.7 in December from 56.8 in November.
The PMI survey covers the Dubai non-oil private sector economy with additional sector data published for travel & tourism, wholesale & retail, and construction.
The PMI reading was the highest since August 2022 and the second-highest in four-and-a-half years. “Steering the headline index was a strong markup in its largest sub-component: the New Orders Index, which indicated a sharper increase in new business intakes in December,” the PMI report said.
The new order growth in December was the second-fastest recorded since June 2019, with around 30 per cent of survey members noting an improvement. “The greatest upturn in sales was seen in the wholesale & retail sector, though growth was also rapid in travel & tourism. Output levels subsequently rose at a marked pace in December, with the expansion broadly unchanged from one month ago,” said the report.