Dubai’s non-oil private sector activity accelerated on the back of a marked upturn in new order volumes, recording its best performance since May 2019, according to the latest PMI survey data from S&P Global.
Businesses enjoyed favourable market conditions and a positive response to greater sales efforts with the investor outlook brightening in the wake of the UAE’s exit from the Financial Action Task Force (FATF) grey list.
The headline S&P Global Dubai Purchasing Managers’ Index (PMI) posted a robust uptick to 58.5 in February from January’s 56.6 indicating a substantial improvement in operating conditions across the non-oil economy. The PMI is derived from individual diffusion indices which measure changes in output, new orders, employment, suppliers’ delivery times and stocks of purchased goods,
“The latest results prompted companies to expand their staffing numbers at the fastest rate in eight-and-a-half years. Likewise, firms accumulated inventories of inputs and semi-finished items rapidly, despite some reports of shipment delays,” said the survey report.
David Owen, senior economist at S&P Global Market Intelligence, said the Dubai PMI climbed to 58.5 in February, which is its joint-strongest reading since 2015 (matching May 2019) and suggests that the Dubai non-oil economy is growing rapidly so far this year.
“In fact, the reading signals that the Dubai non-oil sector is one of the fastest growing worldwide according to global PMI data. Output and new order volumes are proving especially robust, with companies reporting new clients, higher demand and a still improving economy post-pandemic. “Inflationary pressures remained soft which encouraged greater sales promotions, while employment and inventory growth strengthened. All this suggests that the non-oil sector’s expansion has further to run during 2024,” said Owen.
Economists and analysts contend that the investment landscape of Dubai in particular received a major fillip with the UAE’s removal from the FATF’s grey list as it is expected to facilitate a more streamlined foreign currency exchange without the need for excessive scrutiny. The removal from the grey list bodes well for economic diversification and overall business growth of Dubai and other emirates while boosting the flow of FDI to various sectors.
The PMI survey shows that over a third of respondents (36 per cent) saw their output increase since the previous survey period, signalling the fastest upturn in 18 months. “Increased demand, strong market conditions and greater project work were among the reasons cited by firms for higher output. Similarly, after slipping to a five-month low in January, the rate of new business growth accelerated midway into the first quarter, with sharper expansions recorded in all the key industries monitored by the survey.”
The report noted that firms signalled an adverse impact on supplier performance as a result of shipping disruption due to the Red Sea crisis. “Concurrently, the rate of input cost inflation ticked up to a three-month high, though it was still only modest overall and weaker than the long-run trend.”
When assessing the 12-month outlook, Dubai non-oil companies had a more positive view compared to that seen in January, with around 19 per cent of survey respondents expecting output to grow and the rest remaining neutral, the report said.