Business activity in Dubai's non-oil private sector economy remained robust in September as sales growth hit the highest in more than four years amid improving demand.
The emirate's seasonally adjusted S&P Global purchasing managers' index reading rose to 56.1 in September, marking its strongest performance in three months, up from 55.0 in August.
It remained well above the neutral 50 mark separating an expansion from a contraction.
The survey, which covers the construction, wholesale and retail, and travel and tourism sectors, showed that the confidence for future activity also rose sharply last month.
“Dubai non-oil companies reported a rapid acceleration in sales growth during September, which climbed to the highest in over four years and was spurred on by new clients and strengthening economic conditions,” David Owen, senior economist at S&P Global Market Intelligence, said.
“While the impact on business activity growth was muted during the month, business confidence regarding future activity ticked up further to the highest recorded since the start of the Covid-19 pandemic, signalling that firms' near-term growth expectations have improved.”
Dubai’s economy has been booming on the back of strong trade and tourism and grew an annual 2.8 per cent in the first quarter to Dh111.3 billion ($30.3 billion), according to official data released in August.
The emirate's accommodation and food services sector grew 5.6 per cent in the first three months of the year, adding Dh4.5 billion to the economy, as Dubai welcomed 4.67 million international visitors – an 18 per cent increase on the same period in 2022.
Dubai's economy is forecast to grow by 3.5 per cent in 2023, after expanding by 4.4 per cent last year, according to Emirates NBD.
The emirate also retained its position as the world's top destination for attracting greenfield foreign direct investment projects in the first half of this year, cementing its position as a worldwide FDI hub despite global economic headwinds, Dubai Media Office said last week, citing Financial Times fDi Markets data.
Dubai attracted 511 greenfield projects during the period, surpassing second-placed Singapore by 325 projects, it found.
“Faster upturns” in travel and tourism, wholesale and retail, and construction supported the rise in the PMI in September.
The wholesale and retail category noted a “particularly rapid acceleration of growth” from August, the report said.
However, while the latest survey data found that non-oil companies raised their employment numbers over the month, the rate of job creation was mild and the weakest since February.
The pace of inventory accumulation also slowed from the prior month and was “only modest”.
“These slowdowns were partly influenced by a solid and faster rise in average input costs in September,” it said.
The pace of inflation was the strongest in just over a year, with the price increases noted in particular by construction as well as wholesale and retail companies.
Survey panellists reported that price rises were often due to higher raw material costs, which increased despite another sharp improvement in supplier delivery times.
“Rising input prices drove a solid and faster mark-up of overall business expenses, which notably tempered the rate of price discounting – indeed, output charges fell only fractionally,” said Mr Owen.
“The pick-up in cost pressures also appeared to inhibit hiring and inventory growth, which could lead to some capacity constraints if demand continues to rise rapidly.”
