Dubai’s new businesses witnessed their most significant growth in the past ten months during June, as per data from S&P Global. The S&P Global Dubai Purchasing Managers’ Index (PMI) climbed to 56.9 in June, up from 55.3 in May. It indicates a robust improvement in operating conditions within the non-oil sector since August 2022. Employment rates rose steadily, and firms continued to enhance their inventory due to further improvements in supply chains.
The headline index remained well above its long-term trend level of 54.6, with a substantial month-on-month increase of 1.6 points. It marked the most significant rise recorded since October 2021. June data also revealed a relatively modest increase in average input prices. It allowed businesses to offer discounts by reducing costs for goods and services. The PMI is based on individual diffusion indices, which evaluate changes in output, new orders, employment, suppliers’ delivery times, and stocks of purchased goods. The survey encompasses Dubai’s non-oil private sector economy. Also, it offers sector-specific data for travel and tourism, wholesale and retail, and construction.
Other private sectors
In June, Dubai’s non-oil private sector economy experienced a surge in new business growth. It led to a significant overall increase in output, as stated by Trevor Balchin, the economics director at S&P Global Market Intelligence. The key sectors, namely construction, wholesale and retail, travel, and tourism, witnessed faster growth in new projects during this period. The high demand also resulted in continued job creation, with the current streak of growth lasting for 14 consecutive months, the longest in over six years. Despite a slightly accelerated rate of input price inflation in the month, companies managed to maintain lower prices for their customers.
Throughout June, Dubai’s total non-oil private sector business activity continued to rise for the thirty-first consecutive month. It indicates a sharp and sustained expansion, although the pace eased slightly compared to May. All three key sectors showed similar notable growth rates during the midway point of 2023.
In June, employment at non-oil private sector firms continued upward for the 14th consecutive month. Consequently, it marks the longest stretch of continuous job creation in over six years. The employment growth rate has remained relatively stable since May, with figures staying slightly above the long-term trend. Particularly noteworthy was the robust recruitment activity construction firms observed.
Supply chain sector
During June, supply chains showed further improvements, as average lead times decreased for six consecutive months. Companies reported that suppliers met their requests for faster deliveries and facilitated the prompt payment of orders.
Additionally, efforts to build up stocks persisted, as input inventories recorded an eleventh consecutive month of growth. This uninterrupted sequence of rising input inventories is the longest observed over three years.
In June, the pressure on firms’ input costs was under control. While average input prices experienced the fastest rate of increase in three months, they remained relatively subdued compared to the long-run series average since 2010. Construction firms encountered the most significant rise in input costs among all sectors.
On the other hand, charges for goods and services showed a contrasting trend, as they were reduced in June. The discounting rate remained solid, although slightly weaker than in April and May. Looking ahead, the 12-month outlook for activity saw a slight easing compared to May but still stood as the second-strongest since October 2021. Construction displayed the highest optimism among the three critical sectors under monitoring, closely followed by wholesale and retail.
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