Dubai: Non-oil sector indicates strong improvement in business conditions

Dubai-based non-oil firms indicated a stronger improvement in business conditions in February, according to the latest PMI survey data, after the Omicron wave of the Covid-19 pandemic led to a fresh slowdown in demand at the turn of the year.

Business activity continued to expand sharply, while there was a softening of input price pressures.

However, employment continued to expand only slightly, and firms continued to highlight logistical challenges amid the pandemic.

The seasonally adjusted IHS Markit Dubai Purchasing Managers' Index (PMI) climbed to 54.1 in February, after easing to a four-month low of 52.6 in January, to signal a strong improvement in operating conditions in the non-oil economy. The 1.5-point rise was largely driven by the New Orders Index, with only small fluctuations seen in the other four components of the PMI.

The headline IHS Markit Dubai Purchasing Managers’ Index is derived from individual diffusion indices which measure changes in output, new orders, employment, suppliers’ delivery times and stocks of purchased goods.

Non-oil companies saw a sharper increase in new orders midway through the opening quarter, which was widely attributed to an upturn in client demand and a recovery in economic conditions following a brief period of disruption from the Omicron wave. In fact, the rate of new order growth was one of the strongest seen since the start of the pandemic, beaten only by those seen towards the end of last year.

David Owen, Economist at IHS Markit, said: "New business growth in Dubai returned to the strong levels seen at the end of last year in February, in a promising sign that the Omicron variant has had only a minor impact on the economy compared to previous waves of the pandemic.

He said the rebound was most notable in the travel and tourism sector which saw the fastest growth in new business since June 2019.

“A loosening of global travel restrictions should help the tourism industry further in the final weeks of the Expo and throughout the rest of 2022,” he said.

Most notably, the upturn in sales was led by the travel and tourism sector, which posted its strongest growth since June 2019, as a fall in global Covid-19 cases prompted countries to scale back travel restrictions.

New business, meanwhile, rose solidly in the wholesale and retail sector, while construction firms noted a modest increase in new work.

waheedabbas@khaleejtimes.com