Dubai PMI: Travel and tourism business conditions improved in August

Khatija Haque - Head of Research & Chief Economist
Published Date: 09 September 2021

 

Dubai’s PMI was fractionally higher in August at 53.3 from 53.2 in July as business activity rose at the fastest rate in over a year.  Firms attributed this to a continued recovery from the pandemic.  New work also increased in August but at a slightly slower rate than in July.  The employment index rose to 51.4 last month, a 21-month high for this index but still pointing to a relatively modest gain in private sector employment.

Input costs increased at a similar rate to July, and supplier delivery times lengthened only very slightly.  Despite higher costs, firms in Dubai reduced selling prices in August in a competitive environment.  Businesses were a tad more optimistic last month but the overall level of the future output index remains well below the series average.

Dubai PMI and key survey components

Source: IHS Markit, Emirates NBD Research

The travel and tourism index was the best performing of the three sector indices in August, rising to a 21-month high of 55.1 on the back of a sharp increase in business activity and faster growth in new work.  Firms in the sector attributed the improvement to looser travel restrictions allowing more tourists; official visitor numbers have not yet been released for July and August. Despite the surge in activity last month, employment growth in the sector was the softest in three months.   

Tavel & Tourism survey components

Source: IHS Markit, Emirates NBD Research

 

The construction sector index rose to 53.3 in August, the highest reading since July 2019.  Business activity grew at the fastest pace in over a year, but new work growth was more modest.  The surge in activity last month may have been due to efforts to complete projects ahead of the start of Expo 2020 in October.  Construction firms reported steeper increases in purchase costs but did not pass these on through higher selling prices last month.  Employment in the sector increased for the third month in a row.

The wholesale & retail trade sector index slipped to 53.0 in August from 53.3 in July, despite a strong rise in business activity.  New work growth was slower than in July, and margins remain under pressure from rising input costs and lower prices charged.

We remain optimistic that private sector business conditions will improve further in Q4 2021 as Expo 2020 gets underway and the recent further easing of travel restrictions boosts visitor numbers during the high season for the travel & tourism sector.