Dubai PMI slips but still strong in April

Dubai’s headline PMI reading slipped slightly in April, coming in at 54.7, compared to 55.5 the previous month. However, the March reading represented a 33-month high for the index, and the April result remained indicative of a robust expansion in the non-oil private sector even as the EXPO 2020 event had drawn to a close. Of the three key sectors covered by the survey, wholesale & retail trade showed the most robust expansion but while tourism and construction expanded at a slightly slower pace than in March, they remained comfortably above the neutral 50.0 line that delineates contraction and expansion.

Dubai PMI and key survey components

Source: S&P Global, Emirates NBD Research

Price pressures remained salient but the pace softened compared to March, allowing firms to make deeper cuts to output prices as they sought to remain competitive – this was the 10th month in a row where Dubai-based firms cut prices. The employment index turned negative again in this context following four consecutive months of modest expansion, but only marginally so, and firms seemed positive about future business conditions. Business optimism was at the highest level since November and inventory stocking accelerated.

Travel & Tourism

The pace of growth in travel & tourism slowed to a three-month low in April but remained high despite the end of the major tourist draw of the EXPO 2020 event. New business continued to expand at a robust rate and future expectations improved modestly in April on the back of this but even so, employment turned negative again after expanding in February and March, perhaps as firms saw their margins constrained by a sharp rise in input costs which increased at the fastest pace in 40 months. Respondents continue to absorb these higher prices themselves, with discounting at an even sharper pace than seen in March. Firms have cut prices for eight months in a row now.

Wholesale & Retail

The wholesale & retail trade sector expanded sharply in April, growing at the fastest pace since November 2021. This was the third month in a row that the pace of growth has accelerated, but business optimism slipped slightly compared to March’s 11-month high. Margins were under somewhat less pressure as input prices rose at the slowest pace since August last year, but firms did cut prices once again in April after a modest rise in March.

Construction

The construction sector’s growth slowed slightly in April but remained robust on most metrics. New orders rose to a four-month high, boding well for the coming months, although price pressures from raw materials costs continue to weigh on margins even as the pace of acceleration slowed slightly from March. Firms continue to absorb these higher costs, with output prices slashed for the fifth month running. Construction’s employment sub-index turned negative once again in April after turning positive briefly the previous month.