Dubai’s business conditions improved at the weakest rate in a year in February, owing to slowing new order growth, indicating further weakness in the non-oil sector. The headline S&P Global Dubai Purchasing Managers’ Index fell to 54.1 in February from 54.5 in January, showing a significant improvement in the non-oil sector’s health, albeit at its lowest level since February 2022.
Dubai’s business conditions improved in February 2023, indicating a good trend in the city’s economy. The Dubai Economic Tracker Index, which evaluates the overall health of the city’s non-oil private sector economy, rose from 53.5 in January to 55.1 in February. A value above 50 indicates that the sector is expanding, while a reading below 50 suggests that the sector is contracting.
The improvement in business conditions was primarily driven by a rise in new business activity, which climbed at the fastest rate in more than two years. This was most likely due to a combination of factors, including the government’s ongoing efforts to stimulate entrepreneurship and innovation, as well as increased demand for goods and services in the city. Employment increased as well, with firms employing at a faster rate than the previous month, indicating confidence in the city’s economic prospects.
Experts believe that Dubai’s burgeoning property sector, improved prospects for tourist and hospitality industries due to quickly recovering air travel traffic, and the city’s growing investor appeal bode well for the non-oil economy in the medium to long term. The Dubai PMI’s main index fell to a 12-month low of 54.1 in February, maintaining the current trend of declining growth. Despite this, the non-oil industry performed well, as new orders and activity increased significantly,” said David Owen, senior economist at S&P Global Market Intelligence.
Businesses attributed this to new clients and ongoing projects. Construction output climbed at the quickest rate since June 2019, while wholesale and retail output and travel and tourism output both increased faster than in January. In February, non-oil firms boosted employment and inventories at a slower pace. According to the PMI survey, overall job creation was modest and the weakest in five months, while stock levels expanded at the slowest rate in the current seven-month expansion cycle.
As new order growth fell to a 13-month low in January, output growth quickened and remained well above the survey trend. “Businesses were also more optimistic about future output in February, expressing optimism that demand conditions would improve further and the global economic climate would remain stable. In addition, businesses reported a significant improvement in supplier delivery times, with this index reaching its highest level in three and a half years “According to Owen.
Overall, the recovery in business circumstances bodes well for Dubai’s economy, which has been progressively recovering from the COVID-19 pandemic’s impact. Dubai remains an appealing destination for entrepreneurs and investors alike, thanks to a supportive regulatory environment, world-class infrastructure, and a strategic location at the crossroads of global trade.
