Mustafa Abdel Azim (Dubai)
Dubai’s non-oil economy recorded strong positive indicators in October, with new business flows increasing at one of the fastest rates since mid-2019, leading to an increase in the number of jobs at the fastest pace in nearly 3 years, according to results from SA & P Global’s Purchasing Managers Index
The latest PMI data in Dubai indicated a strong recovery in conditions in the non-oil economy in October 2022 as activity levels expanded at an accelerating pace and price cuts continued to stimulate demand rates after Producer prices fell the highest rate since August 2020 and lower prices for the second time in three months.
The Dubai Economy Monitor Purchasing Managers’ Index – an indicator derived from individual diffusion indicators that measures changes in production, new orders, employment, supplier delivery times and inventory of purchased goods – scored 56.0 points in October compared to 56.2 points in September, indicating a strong degree of expansion in a non-oil private sector economy.
The report attributes the slight decline in the purchasing managers’ index to the decline in the underproduction index, which indicates the expansion of commercial activity at a slower pace than before, but is still significant in the beginning of the fourth quarter, while all sectors under review continued to show significant growth rates, driven by the largest increase in wholesale and retail trade since July 2019.
The increase in activity has generally been linked to a notable increase in new order flows, while the sales growth rate has increased slightly since September and was one of the strongest rates recorded in more than three years, while high levels demand encouraged companies to increase their number of employees in October.
It should be noted that the job creation rate has risen to the fastest level since November 2019, although it has recorded a reading in line with the long-term average, as many companies have indicated efforts to increase their absorptive capacities with the increased workloads.
The latest data from the study also recorded an increase in inventories, which led to the extension of the current stock-building period to three months. The increase in inventories was favored by the improvement in delivery times, albeit to a modest extent.
Non-oil companies in Dubai saw a new drop in their spending during the month of October, recording the second drop in the past three months, and most of the participating companies attributed this drop to the drop in oil prices and in transport, however, the rate of decline was marginal and less intense than the record level recorded in August.
As cost pressures eased, companies were encouraged to cut sales prices at a strong and accelerating pace in October, the rate of price reduction was the fastest in over two years, the industry at wholesale and retail saw the largest decline, while the construction sector was the only study category that saw an increase in production prices.
David Owen, an economic analyst at S&P Global Market Intelligence, said trading conditions in Dubai continued to improve during the month of October, according to PMI data, noting that although the growth rate fell to its lowest level in five months , has remained one of the highest rates recorded in the past three years, as companies have seen a rapid increase in the volume of new business.
As a result, he explained, employment levels have risen at the fastest pace in nearly three years, as companies have sought to increase the number of employees and prepare for an increase in workloads. At the same time, falling commodity prices and lower transportation costs helped reduce business expenses for the second time in three months, allowing for a sharp drop in production prices.
