Dubai PMI slips in May

The Dubai PMI fell to 51.6 in May from a 16-month high of 53.5 in April, as the rate of improvement in business activity and new work slowed sharply. Private sector employment declined slightly on the back of weaker activity growth, and firms reduced selling prices modestly to secure new work.  Suppliers’ delivery times lengthened for the fourth month in a row, signalling continued disruption to the supply chain.  Input costs also rose m/m from April. Businesses were largely neutral on expectations for the coming year, with the future output index declining to 51.6 from 58.8 in April. 

Dubai PMI and survey components

Source: IHS Markit, Emirates NBD Research

Tighter travel restrictions on visitors from India were imposed in late April in response to the surging coronavirus cases there, and were extended to other south east Asian countries as well in May.  This weighed on the travel & tourism sector in particular last month, with output and new work declining m/m from April. 

Output and new work growth in the wholesale and retail sector slowed in May but remained in expansion territory, albeit with significant price discounting by firms.  Selling prices fell at the sharpest rate in eight months even as input costs rose last month.

In the construction sector, business activity increased at a faster rate in May due to ongoing projects, but there was almost no growth in new work.  Prices charged declined at a steeper rate than in April although the firms in the sector saw input costs rise for the sixth month in a row.

Overall the survey data suggest that growth momentum in Dubai's private sector slowed in May.  However, we expect the recovery to pick up again in H2 as progress continues to be made with administering Covid-19 vaccinations globally.