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Khatija Haque - Head of Research & Chief Economist
Published Date: 12 January 2020
The Dubai PMI eased further to 52.3 in December from 53.5 in November, the lowest reading since August. While output increased at a slightly faster rate in December, new order growth slowed, with the latter index falling to the lowest level since February 2016. Employment in Dubai’s private sector was also broadly unchanged at the end of last year, after increasing slightly in October and November. Firms continued to discount selling prices in December, despite rising input costs.
Source: IHS Markit, Emirates NBD Research
Of the three sectors surveyed, travel & tourism posted the highest sector index of 54.4, although this was lower than the October and November readings. Output in the travel & tourism sector rose at the fastest rate since July. However, firms continued to offer price discounts in order to support demand, and employment in the sector was broadly unchanged in December. Businesses in the sector remained optimistic about the coming year, but the degree of optimism was weaker than in October and November.
The construction sector index rose slightly to 51.7 in December on faster growth in output and a slight increase in employment. The new work index rose to 50.5 in December after declining in November. Businesses in the construction sector were the least optimistic about their output in a year’s time since December 2018.
The wholesale & retail trade index fell to 50.9 in December, the lowest reading since February 2016, as both output and new work growth slowed, despite further price discounting.
Overall, the Dubai PMI survey points to relatively subdued demand in the emirate at the end of last year. The average reading of the PMI in H2 2019 was markedly lower than in H1, suggesting that private sector growth may have slowed in the second half of 2019. Firms expect conditions to improve over the next 12 months however, with Expo 2020 and an expected recovery in tourism and investment cited as reasons for optimism.
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