Business activity in Dubai's non-oil private sector economy remained robust in January, expanding for the ninth month in a row as consumer demand improved along with employment in the emirate.
The seasonally adjusted S&P Global purchasing managers' index reading in January softened to 54.5, from 55.2 in December, staying firmly above the neutral 50 mark that separates economic expansion from contraction.
Although the pace of growth was the slowest since last February, with the reading having hit a post-coronavirus peak in the third quarter of 2022, it indicates a strong improvement in operating conditions across Dubai's non-oil private sector, the survey said.
The index is well supported by “robust expansions in both output and new orders”, said David Owen, a senior economist at S&P Global Market Intelligence.
Non-oil companies in Dubai continued to indicate a “strong demand environment” in January, driven by higher customer orders and increased advanced bookings as new projects commenced.
While slightly softer than in December, the rate of new order growth remained “marked overall”, boosted by the strongest increase in new work at construction companies, which rose to a three-and-half-year high, according to the survey.
“Subsequently, business activity levels continued to rise sharply at the turn of the year,” S&P said.
Dubai's biggest lender Emirate NBD said the January PMI was “in line with our expectations, given the headwinds facing the global economy at large”.
This growth is still a “robust reading when compared with the negative or weak PMI readings we have seen in the major global economies since the middle of last year”, said Daniel Richards, Emirates NBD’s Mena economist.
The higher demand pressure led non-oil companies in the emirate, the commercial and tourism centre of the Middle East, to increase employment numbers, with the rate of job creation slightly shy of October's near three-year high.
The latest survey data also pointed to a solid improvement in supplier performance as overall lead times decreased.
That improvement supported another round of input stockpiling and meant that cost pressures remained relatively settled in January, the survey said.
The stable cost environment also allowed companies to continue discounting output prices.
“Dubai companies continued to benefit from relatively benign supply side and pricing conditions,” Mr Owen said.
“Delivery times improved at the strongest rate in three-and-a-half years while overall input costs were largely unchanged following a slight drop in December.
“These factors helped firms to increase their headcounts and boost inventory levels.”
Dubai's economy expanded by 4.6 per cent on an annual basis in the first nine months of 2022, with wholesale and retail trade accounting for 24.1 per cent of its gross domestic product, according to the Dubai Statistics Centre data.
Emirates NBD, estimates Dubai's full-year 2022 growth at 5 per cent. It expects the emirate’s GDP to grow by 3.5 per cent in 2023.
The tourism sector, a key component of the emirate's economy has made a strong rebound from the coronavirus-induced slowdown.
Dubai hosted 11.4 million overnight international visitors in the first 10 months of the year, up 134 per cent from the same period in 2021, according to latest government statistics.
“The PMI for travel and tourism [sector] was the strongest performing of the three individual sectors covered by the survey in January, as the headline measure rose to a three-month high,” Mr Richards said.
“New work also accelerated substantially, compared with the previous month, supported by ongoing discounting.”
Dubai's property market also had a record-breaking year with further price rises in December.
The market recorded 90,881 transactions in 2022, exceeding the previous high of 81,182 in 2009, property consultancy CBRE said in its Dubai Residential Market Snapshot report.
The robust expansion of the emirate’s non-oil private sector economy also improved the 12-month business outlook in January.
It picked up slightly from the end of the last year, and optimism among the non-oil companies towards future activity was slightly above the average recorded in 2022, S&P said.