Business activity in Dubai's non-oil private sector economy continued to improve in April as output grew at the second-fastest rate since mid-2019 and new business rose sharply.
The headline S&P Global Dubai Purchasing Managers' Index slipped to 54.7 in April from 55.5 in March, remaining above the neutral 50 no-change mark for the 17th consecutive month.
Despite falling for the first time since January, the index signalled a strong improvement in business conditions in the non-oil private sector, S&P Global said.
A reading above the neutral 50 level indicates economic expansion, while one below points to a contraction.
“Businesses indicated that the relaxing of Covid-19 measures continued to have a positive impact on demand,” said David Owen, an economist at S&P Global.
“The upturn was also encouraging considering that the Expo 2020 has now finished and that overall new business growth, including in the travel and tourism industry, remained strong.”
The single biggest positive influence on the PMI in April was output growth, which businesses surveyed said was supported by a sharp rise in customer sales as the emirate's economy continued to recover from the easing of pandemic-related restrictions.
The output expansion was substantial across sectors, with the most noticeable acceleration in the wholesale and retail segment. Upturns in Dubai's construction and travel and tourism sectors eased slightly from post-pandemic highs in March.
Volumes of new orders in April across the non-oil economy continued to rise at a marked pace, only marginally slower than in March, according to the latest PMI data.
The UAE economy has rebounded strongly from the pandemic-driven slowdown in 2021, carrying the growth momentum into 2022, boosted by Expo 2020 Dubai and sharp rise in, retail, travel and tourism sectors. The success of the UAE's mass testing and vaccination programme has allowed the government to ease Covid-19 restrictions, boosting the national economy.
The UAE’s non-oil economy expanded an annual 7.8 per cent in the fourth quarter of 2021, driven by the easing of Covid-related restrictions and travel curbs, the Central Bank of the UAE said in its Quarterly Economic Review.
In March, Sheikh Mohammed bin Rashid, Vice President and Ruler of Dubai, on Twitter said the country's economy grew 3.8 per cent in 2021, above the World Bank's 2.1 per cent estimate. The International Monetary Fund expects the country's economy to expand by 4.2 per cent in 2022.
Dubai's economy grew 6.3 per cent year-on-year in the first nine months of 2021, according to preliminary data from the Dubai Statistics Centre. Emirates NBD estimates Dubai's economy grew about 5.5 per cent for the full year 2021 — an upward revision from its earlier forecast of 4 per cent.
With slower global growth, higher interest rates and a stronger US dollar, the lender expects growth of 4 per cent to 4.5 per cent in 2022.
Dubai's tourism sector underpinned its economic rebound, with international visitor numbers in the fourth quarter climbing to about 74 per cent of pre-pandemic levels. The emirate was among the first major global tourism destinations to open its borders under strict health and safety guidelines.
Dubai was also ranked first in the world in terms of the hotel occupancy rates, with hospitality establishments recording a rate of 82 per cent in the first three months of this year, he added.
The Dubai property market also recorded its strongest start to a year, with 12,119 sales transactions in the first quarter of 2022, according to Property Monitor data. The boom in Dubai's prime residential market led to prices rising almost 60 per cent in the past 12 months, driven by growing interest from international investors, according to consultancy Knight Frank.
Despite a strong rebound in the emirate's economy, businesses are feeling the pinch from rising costs driven by higher raw material and fuel prices in global markets.
“Despite increasing reports of higher material and fuel prices since the outbreak of war in Ukraine, the overall rise in input costs was again only modest in April,” Mr Owen said. “This allowed businesses to offer additional price promotions, as output charges were reduced for the 10th month running.”
Expectations of continued sales increases led to higher optimism for future activity in April, the strongest recorded since last November.