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Dubai’s economy sustains robust growth in January

Demand levels continue to increase sharply in January; Output rises rapidly

The non-oil business activity in Dubai’s private sector sustained a robust growth in January for the ninth consecutive month as consumer demand improved along with employment in the emirate, latest data shows.

The business conditions across the Dubai non-oil economy pointed to a further slowdown in growth momentum at the beginning of 2023, but rising demand and stable input costs encouraged increases in employment and inventories while average selling prices continued to fall.

“These developments were partly supported by an improving supply chain environment, as delivery times shortened to the greatest extent since September 2019,” according to S&P Global purchasing managers' index.

The seasonally adjusted S&P Global purchasing managers' index eased to 54.5 points in January from 55.2 in December, indicating a stability above the neutral 50 mark that separates economic expansion from contraction. The index dropped for the fourth time in five months, falling from 55.2 in December to its lowest since February 2022.

Strong demand environment

The survey further pointed out that non-oil companies continued to indicate a strong demand environment in January with higher customer orders, increased advanced bookings and new projects commencing.

“The rate of new order growth remained marked overall, boosted by the strongest increase in new work at construction firms for three-and-a-half years. Subsequently, business activity levels continued to rise sharply at the turn of the year, although like new orders, the pace of expansion was the second-weakest for 11 months,” according to the survey.

The Dubai Statistics Centre’s data showed that the emirate’s economy recorded 4.6 per cent year-on-year growth during the first nine months of 2022. However, the experts and research reports indicate that the emirate will be able to register over five per cent GDP growth in 2022.

Referring to Emirates NBD research, they said Dubai's economic growth will be eased to 3.5 this year after hitting five per cent growth rate in 2022.

PMI hits 11-month low

David Owen, senior economist at S&P Global Market Intelligence, said the Dubai PMI dropped to an 11-month low in January to provide a further signal that post-pandemic growth across the emirate peaked in the third quarter of 2022.

“The index was still well above the 50.0 no-change mark at 54.5, supported by robust expansions in both output and new orders,” he said.

Higher demand and reports of capacity pressures led firms to increase their employment numbers, with the rate of job creation just shy of October's near three-year high. The latest survey data also pointed to a solid improvement in supplier performance. After lengthening slightly in the previous month, overall lead times decreased by the most in three-and-a-half years, says the survey.

The survey, which covers the Dubai non-oil private sector economy with additional sector data published for travel and tourism, wholesale and retail and construction, noted that stable cost environment allowed firms to discount their output prices once again in January.

Dubai firms benefit

Owen said Dubai companies continued to benefit from relatively benign supply side and pricing conditions.

“Delivery times improved at the strongest rate in three-and-a-half years, whilst overall input costs were largely unchanged following a slight drop in December. These factors helped firms to increase their headcounts and boost inventory levels," he said.

The survey noted that non-oil companies stayed relatively muted about the 12-month business outlook in January despite robust increases in both activity and demand.

“Whilst picking up slightly since the end of the last year, optimism towards future activity remained lower than the long-run series trend, with just 11 per cent of panellists expecting growth amid hopes of higher new orders. However, sentiment was slightly above the average recorded in 2022,” the survey concluded.

— muzaffarrizvi@khaleejtimes.com