Dubai's business conditions stay robust amid stronger output and employment growth

Companies at their most optimistic about future activity since March 2020

The Dubai Creek. The emirate's economy expanded by 4.6 per cent on an annual basis in the first nine months of 2022. AFP

Business activity in Dubai's non-oil private sector economy continued to improve at a “robust pace” in May, boosted but stronger output and employment.

The emirate's seasonally adjusted S&P Global purchasing managers' index reading softened slightly to 55.3 in May, from 56.4 in April, remaining well above the neutral 50-mark separating an expansion from a contraction.

“While new business growth slowed from April's eight-month high, it was still sharp overall,” said David Owen, a senior economist at S&P Global Market Intelligence.

Surveyed businesses registered the fastest expansion in activity levels for a fifth consecutive month, which was the strongest since August 2022.

In response to a sharp rise in new order intakes and the rise in output, businesses stepped up their recruitment, with employment numbers rising for the 13th month in a row in the fastest pace of job creation since January 2018.

Lead times shortened at their fastest pace since August 2019.

“Business expectations for the year ahead improved sharply in May as firms grew more confident that favourable economic conditions will support new business intakes,” Mr Owen said.

“Perhaps a symbol of the region moving clear of the [Covid-19] pandemic era, the degree of business confidence was the strongest recorded since March 2020, immediately before the first global lockdown.”

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 data from the emirate's statistics centre.

Emirates NBD estimates Dubai's full-year growth for 2022 at 5 per cent and expects its GDP to expand by 3.5 per cent in 2023.

The aviation and tourism sector, a key component of the emirate's non-oil economy, is growing strongly this year after rebounding from the coronavirus-induced slowdown.

The tourism sector in the first quarter probably received a boost from the Eid holidays in April, with activity and new work rising at a sharp rate, the latter at the fastest pace in eight months, according to Emirates NBD.

Dubai International Airport increased its annual passenger forecast for this year after hitting 95.6 per cent of its pre-pandemic levels of traffic in the first quarter of this year.

The airport handled 21.2 million passengers during the first three months of the year, up 55.8 per cent from the first quarter of 2022, Dubai Airports said on Tuesday.

Dubai's property market also registered strong growth in the first quarter, with total transaction value up 80 per annually to Dh157 billion ($42.75 billion) in the first quarter of 2023, according to official data.

The number of transactions also rose 49 per cent to 38,715 during the period.