Dubai PMI rose in February

Dubai’s PMI rose to 50.9 in February from 50.6 in January, indicating some improvement in business condition in the non-oil private sector last month. Business activity accelerated slightly but new work declined in February, likely due to tighter restrictions on some sectors of the economy (mainly services).  Encouragingly, the employment index stayed in expansion territory for the second month in a row (50.3), although the rate of job growth in February was marginal. 

There is little sign of inflationary pressure in the Dubai PMI survey, with both input costs and selling prices largely unchanged from January. Businesses were slightly more optimistic about their outlook for the next year, with the future output index rising to 53.7 in February, the highest level since September 2020, as the UAE’s vaccine rollout remains among the fastest in the world.

Dubai PMI and key components

Source: IHS Markit, Emirates NBD Research

The construction sector saw the strongest improvement in business conditions in February, with output and new work rising at the fastest rate in several months. Indeed new work growth was the fastest since July 2019. Nevertheless, this did not translate into hiring in the sector, as employment declined for the twelfth month in a row in February, albeit at a slower rate than in prior months. 

The wholesale & retail sector PMI rose to 51.8 in February from 51.3 in January, on faster new work growth. Job growth in the sector was marginal last month however. Selling prices declined at the slowest rate since July 2020.  Firms in the sector were more optimistic about their future output than they have been in the last six months.

Business conditions in the travel & tourism sector deteriorated for the second month in a row in February, as both output and new work declined on the back of travel restrictions globally, and stricter measures to contain the spread of Covid-19 domestically. Employment in the sector was largely unchanged in February, after eleven months of contraction.  However, firms in the sector were the most optimistic about the outlook since September 2020. 

We expect the recovery in the non-oil sectors of the economy to gain momentum from the second quarter of this year, as global travel restrictions are eased on the back of vaccine rollouts and slowing new Covid-19 infections.