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Strong demand and new business intakes gave a boost to Dubai’s non-oil sector in December, with the best performance seen in 16 months, according to the S&P Global Purchasing Managers’ Index (PMI).
Last year ended with the headline PMI for December rising to 57.7, from November’s 56.8, the highest reading since August 2022 and the second highest in more than four years.
Rapid improvements in sales and activity in the emirate were further aided by softening cost pressures, which allowed firms to offer deeper discounts to customers, while further facilitating new order growth.
A stronger demand also drove an uptick in confidence towards the next 12 months, resulting in a faster rate of hiring.
Inventory growth stayed robust but slowed amid logistical challenges.
According to the New Orders Index, order growth was the second-fastest recorded since June 2019, with around 30% of survey members noting an improvement. The greatest upturn in sales was seen in the wholesale and retail sector, though growth was also rapid in travel and tourism.
Output levels subsequently rose at a marked pace in December, with the expansion broadly unchanged from one month ago.
“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,” said David Owen, Senior Economist at S&P Global Market Intelligence.
Reports of increased wages and higher input demand meant that overall expenses still ticked higher, but at a subdued pace. At the same time, there was evidence that supply chain hold-ups resulted in a softer improvement in delivery times compared to November.
Dubai’s performance rise was in line with the UAE’s PMI, which was released last week, with favourable economic trends, coupled with an upturn in new business, also driving the country’s PMI up from 57.0 in November to 57.4 in December - the second-highest reading since June 2019.
The UAE has been heavily diversifying its non-oil sector, with the country announcing this week it was targeting the tourism sector’s contribution to the local economy to hit AED 450 billion ($122.5 billion) by 2031.
(Writing by Bindu Rai, editing by Brinda Darasha)
