Sales growth climbs to highest in 28 months, led by travel and tourism
Dubai’s non-oil private sector in November saw business activity rise the strongest in nearly 20 months, as the emirate benefited from a rebound in international travel and higher client demand on account of Expo 2020, a new report said.
The seasonally adjusted IHS Markit Dubai Purchasing Managers' Index (PMI) stayed stable at 54.5 during the month, indicating the strongest improvement in operating conditions since October 2019. Readings above 50 signals expansion in the economy.
"The Expo 2020 continued to bring strong growth to the Dubai non-oil economy in its second month, with the November PMI remaining at its joint-highest level since October 2019, while new business growth picked up to the fastest for more than two years,” said David Owen, economist at IHS Markit.
Rate of sales growth climbed to its highest in 28 months, led by the travel and tourism sector, which benefited the most. Wholesale and retail also performed well. On the other hand, the construction industry struggled with weak demand and supply side constraints.
Future output
However, confidence regarding future output slid to a three-month low and remained much weaker than pre-COVID trends. Therefore, hiring was subdued, with job numbers falling slightly for the first time since May, the PMI survey found.
“This came as the outlook for future activity, while one of the highest seen in 2021, was subdued compared to pre-COVID trends. Some firms are still unsettled by the pandemic and there were doubts about the strength of the recovery once the boost from the Expo 2020 fades,” said Owen.
Input purchases and stock levels also expanded. Supplier performance continued to improve, following a renewed upturn in the previous month for the first time since the start of the year. Companies were helped by another muted rise in input costs, though the rate of inflation did pick up to a three-month high.
However, panelists said discounts had supported new order volumes in November. Some firms cut prices to stay ahead of their competitors and gain new customers.
“Looking ahead, Dubai’s 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 2020. That said, 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.”
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