Dubai's non-oil economy hits 10-month high on new business

The purchasing manager's index registers the fastest rise in new business since August 2022 with growth of total activity remaining marked

Dubai's non-oil private sector economy rose to a ten-month high in June. Antonie Robertson/The National

Business activity in Dubai's non-oil private sector economy rose to a ten-month high in June, boosted by a sharp rise in sales and new orders as demand growth quickened.

The emirate's seasonally adjusted S&P Global purchasing managers' index reading rose to 56.9 in June, from 55.3 in May, marking the strongest overall improvement in operating conditions in the non-oil sector since August 2022.

Demand rose for the twenty-first successive month and the headline index remained well above its long-run trend level of 54.6. The month-on-month rise at 1.6 points was the largest recorded since October 2021.

A reading over 50 indicates an expansion in business conditions, while one below represents a contraction.

The sectors monitored by the survey – construction, wholesale and retail and travel and tourism – registered faster increases in new work midway through the year.

“Strong demand led to further job creation, with the current 14-month run of growth the longest in over six years,” said Trevor Balchin, economics director at S&P Global Market Intelligence.

“Companies were also able to continue offering lower prices to customers despite a slightly faster rate of input price inflation during the month.”

In line with rising demand, employment at non-oil private sector firms rose for the fourteenth successive month in June, the longest run of continuous job creation in over six years.

Recruitment was “notably robust” among construction firms and supply chains improved further in June, with average lead times falling for the sixth month running, according to the survey.

Companies reported that requests for quicker deliveries had been met by suppliers, aided by the prompt payment of orders. Stock building efforts continued as inventories rose for the eleventh month, the longest sequence in over three years.

The 12-month outlook for activity was the second-strongest since October 2021 and of the three key sectors monitored, construction was the most optimistic, followed closely by wholesale and retail, according to the survey.

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.

The emirate's economy is estimated to have grown 5 per cent last year and is forecast to increase by 3.5 per cent in 2023, 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 2023.

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's property market has also made a strong recovery from the coronavirus-induced slowdown on the back of government initiatives such as residency permits for retirees and remote workers, as well as the expansion of the 10-year golden visa programme and the economic gains generated by Expo 2020 Dubai and higher oil prices.

The Dubai property market 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 during the period to 38,715.

Dubai is the world's top market for $10 million homes as sales hit $3.1 billion in the first half of the year, edging past Hong Kong and New York, according to global property consultancy Knight Frank.

In the first six months, Dubai achieved 79 per cent of the total number of $10 million homes sold in 2022, according to the consultancy.