Dubai’s new business activity increases thanks to boost from Expo 2020

Dubai’s private non-oil sector saw the biggest increase in business activity in nearly 20 months in November, as the emirate benefited from a rebound in international travel and increased customer demand due to the ‘Expo 2020, according to a new report.

The seasonally adjusted IHS Markit Dubai Purchasing Managers’ Index (PMI) remained stable at 54.5 during the month, indicating the largest improvement in operating conditions since October 2019. Values ​​above 50 signal a expansion of the economy.

Expo 2020 continued to bring strong growth to Dubai’s non-oil economy in its second month, with the November PMI remaining at its highest level since October 2019, while new business growth has reached the fastest in over two years, “said David Owen, economist at IHS Markit.

The sales growth rate reached its highest level in 28 months, led by the travel and tourism sector, which benefited the most. Wholesale and retail trade also performed well. On the other hand, the construction industry has struggled with weak demand and constraints on the supply side.

Future release

However, confidence about future production fell to its lowest level in three months and remained much lower than pre-COVID trends. As a result, hiring has been subdued, with the number of jobs declining slightly for the first time since May, according to the PMI survey.

“This came as the outlook for future activity, although one of the highest seen in 2021, was moderate compared to pre-COVID trends. Some companies are still destabilized by the pandemic and there were doubts about the strength of the recovery once the momentum for Expo 2020 wears off, ”said Owen.

Input purchases and inventory levels have also increased. Supplier performance continued to improve, following a further upturn in the previous month for the first time since the start of the year. Firms were helped by a further moderate rise in input costs, although the inflation rate hit a three-month high.

However, panelists said the discounts supported new order volumes in November. Some companies lower their prices to stay ahead of their competition and gain new customers.

“Looking ahead, Dubai‘s non-oil companies continued to forecast increased activity over the next 12 months, with expectations often driven by an increase in new work at Expo 2020. That said, the optimism decreased compared to the previous month and was low. compared to pre-pandemic trends and the current rate of production growth, amid reports that the continuing threat of COVID-19 kept the forecast moderate. ”

(Reporting by Brinda Darasha; editing by Cleofe Maceda)

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© ZAWYA 2021

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