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Fri, Nov 15, 2024 | Jumada al-Awwal 13, 1446 | DXB
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Output growth remains strong in non-oil economy, but slips to weakest since February
At 55.2, the headline PMI remained firmly above the 50.0 no-change mark in December to indicate a strong improvement in operating conditions across the non-oil sector
Businesses continued to indicate subdued optimism towards future output, but took some positivity from a renewed fall in overall cost pressures.
The non-oil business activity in Dubai remained strong in December as new orders continued to rise sharply while jobs outlook stayed moderate amid subdued outlook, latest data shows.
The latest Dubai PMI signalled a further waning of growth momentum in non-oil activity at the end of 2022, as output rose sharply but to the least marked extent since February. New business growth also remained down from rates seen earlier in the year, while job creation slipped to the weakest since September.
At 55.2, the headline PMI remained firmly above the 50.0 no-change mark in December to indicate a strong improvement in operating conditions across the non-oil sector. The index improved slightly from 54.9 in November, but nonetheless was at its second-lowest since April.
Businesses continued to indicate subdued optimism towards future output, but took some positivity from a renewed fall in overall cost pressures. The headline S&P Global Dubai Purchasing Managers' Index (PMI) is derived from individual diffusion indices which measure changes in output, new orders, employment, suppliers’ delivery times and stocks of purchased goods.
The survey covers the Dubai non-oil private sector economy, with additional sector data published for travel and tourism, wholesale and retail and construction.
Robust performance
David Owen, economist at S&P Global Market Intelligence, said growth in Dubai non-oil activity slipped to its softest rate for 10 months in December, but nonetheless remained robust and stronger than the average seen since the survey began in 2010.
“Firms linked the expansion to a sharp upturn in new order inflows and a continued improvement in demand conditions,” he said.
The latest results suggest that whilst the post-pandemic bounce in the non-oil sector is continuing to wane from its peak in August, the emirate is performing much better than global economic trends for activity and demand. “This outperformance is also true for inflation, as businesses saw a reduction in input costs for the third time in five months helped by improved supply conditions, compared with marked inflation rates across regions such as USA and Europe," Owen said.
Strong expansion in output
The latest survey data signalled a strong expansion in output levels at the end of the year, as survey panellists again highlighted rising new order volumes and improving customer demand. The upturn remained broad-based by monitored sector, with sharp increases seen in construction, wholesale and retail, and travel and tourism.
Reflecting a further slowdown in growth momentum from August's post-pandemic peak, the overall expansion in business activity softened for the fourth consecutive month to the weakest since February. A similar trend was seen for new orders. Despite growth picking up marginally from November and remaining robust, it was down from the speeds recorded in the middle of the year. On a positive note, new work received by construction firms rose at the strongest rate in nearly two years.
Less upbeat on future
Firms were less upbeat about future activity levels in December, with positivity slipping to a four-month low. Weaker output forecasts fed through to a softer rise in employment numbers, as staffing grew only slightly and to the smallest extent since September.
“By sector, jobs growth was mainly driven by the construction and wholesale and retail categories, whereas staffing was broadly unchanged in travel and tourism. Conversely, businesses expanded their stocks of purchases at a solid and accelerated rate in December, amid reports of higher input requirements for project work. However, with some firms mentioning challenges at customs, there was a slight lengthening of supplier delivery times for the first time in four months. Greater stockpiling was helped by a renewed decrease in overall cost burdens during December,” according to the statement.
Input prices fell for the third time in five months, reflecting much softer inflationary pressures than seen earlier in the year, as firms mentioned that improved input availability reduced pressure on prices. That said, input costs continued to increase at travel & tourism companies.
“The overall fall in input costs encouraged Dubai businesses to offer additional price discounts at the end of the year. Output charges decreased for the fifth month running, and at a solid pace that was the faster than in November,” the statement said.
Key findings
> New orders continue to rise sharply
> Jobs growth moderates amid subdued outlook
> Third reduction in input costs in five months
— muzaffarrizvi@khaleejtimes.com
A Staff Reporter
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