Business conditions in Dubai show strong recovery for 3 years – News

Companies saw a further recovery in sales, although cost pressures accelerated in the non-oil economy, due to continued volatility in global energy markets, according to the latest PMI survey report. of S&P Global.



The S&P Global Dubai Purchasing Managers’ Index (PMI) rose to 55.7 in May, from 54.7 in April, and signaled a robust improvement in the health of the non-oil private sector. — Stock photo

Published: Thu 9 Jun 2022, 16:53

Last update: Fri, June 10, 2022, 10:15 AM

Dubai‘s business conditions showed a three-year improvement in May thanks to a strong rebound in the travel and tourism sector, according to a survey.

Companies saw a further recovery in sales, although cost pressures accelerated in the non-oil economy, due to continued volatility in global energy markets, according to the latest PMI survey report. of S&P Global.

The S&P Global Dubai Purchasing Managers’ Index (PMI) rose to 55.7 in May, from 54.7 in April, and signaled a robust improvement in the health of the non-oil private sector. In fact, the latest reading was the highest since June 2019, according to the report.

David Owen, an economist at S&P Global Market Intelligence, said the PMI data for Dubai’s non-oil economy had two important findings. First, volatility in the global energy market has pushed cost inflation to a more than four-year high; and second, a rapidly recovering tourism sector now masks the weak performance of the rest of the economy.

In the first four months of 2022, Dubai’s tourism sector continued to recover rapidly from the Covid-19 pandemic as the emirate saw a massive increase in arrivals. According to the Dubai Media Office, the number of visitors to the city reached 5.1 million in January-April 2022, registering a significant increase of 203%. The increase in the flow of tourists helped improve the occupancy rate of hotels in the emirate, which reached 76% during the period.

Dubai welcomed almost four million international overnight visitors between January and March 2022, a whopping 214% year-on-year growth. The city also ranked first in the world for hotel occupancy rate in the first quarter of 2022, with 82%.

Own said travel and tourism was the only sector to see an acceleration in growth in terms of new orders in May, hitting the fastest pace in nearly three years. “In comparison, growth in wholesale and retail trade fell to its lowest level in three months, while construction recorded the first drop in new work since last September, as businesses and households grappled with growing inflationary pressures.

“Rising input costs have also put additional pressure on corporate margins, amid additional reports of fee rebates. This contributed to a more subdued outlook for future activity, which slipped to the lowest in a year,” Owen said.

The pace of inflation in the non-oil economy has accelerated to its fastest level in just over four years, with businesses taking particular note of the impact of rising fuel prices due to the war in Ukraine, according to the PMI report. Other items such as steel, aluminum, chemicals and wood were also cited as having risen in price. As companies tried to pass those costs on to customers, overall production costs fell for the eleventh consecutive month in May.

According to survey panelists, strong competitive pressures continued to drive down selling prices, although the overall reduction was only modest. Meanwhile, survey data pointed to another marked increase in non-oil business activity in May.

“Companies reported that increased volumes of new orders and ongoing project work were behind the expansion, which was the second fastest in nearly three years. Supporting the rise in production, companies increased their workforces during the month, after a slight reduction in April. Although marginal, the pace of job creation has been the fastest in 2022 so far,” he said.

Looking ahead, businesses were markedly less confident of an uptick in activity in the year ahead in May as inflation fears weighed on sales growth expectations. In fact, the degree of optimism has fallen to the lowest since May 2021, according to the report.

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