Dubai: Non-oil sector indicates strong improvement in economic conditions – News

Non-oil companies saw a stronger increase in new orders in the middle of the first quarter.



W.A.M.

Published: Wed 9 March 2022, 08:46

Last update: Wed 9 Mar 2022, 6:46 PM

Dubai-based non-oil companies reported 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 further slowdown in demand in the beginning of the year.

Commercial activity continued to grow strongly, while pressure on input prices eased.

However, employment continued to grow only slightly and companies continued to highlight pandemic-related logistical challenges.

The seasonally adjusted IHS Markit Dubai Purchasing Managers’ Index (PMI) climbed to 54.1 in February, after hitting a four-month low of 52.6 in January, to signal a strong improvement in trading conditions. exploitation 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 IHS Markit Dubai Purchasing Managers’ Index stock is derived from individual circulation indices that measure changes in production, new orders, employment, supplier delivery times and inventories of purchased goods.

Non-oil companies saw a sharper increase in new orders in the middle of the first quarter, which was largely attributed to a recovery in customer demand and a recovery in economic conditions after a brief period of disruption from the Omicron wave. . In fact, the growth rate of new orders 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 has returned to the high levels seen at the end of last year in February, a promising sign that the Omicron variant has had only an impact. minor on the economy compared to previous waves of the pandemic.

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

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

In particular, the recovery in sales was driven by the travel and tourism sector, which recorded its strongest growth since June 2019, as a drop in global Covid-19 cases prompted countries to reduce travel restrictions. .

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

Non-oil private sector production levels rose sharply during February, although the rate of expansion fell to its lowest level in five months. Some panelists noted that delays in the arrival of cargo shipments continued to limit activity. Increased travel and construction projects continued to support overall growth.

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Despite the strong growth in sales and activity, efforts to strengthen the workforce have remained limited, with a pace of job creation little changed compared to that observed at the start of 2022 and only marginal. Suppliers were able to deliver inputs faster for the second straight month in February, although global shortages and shipping delays meant the overall improvement was only marginal. Inventory levels fell slightly for the third month in a row.

Looking ahead, non-oil businesses in Dubai continued to show a modest degree of confidence in future activity. Overall sentiment recovered from January’s eight-month low, but remained weak in the context of the series’ history

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