09 March 2023
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Dubai PMI slower but still strong in February

The Dubai PMI weakened in February but was still well above the neutral level

By Daniel Richards


The S&P Global Dubai PMI survey declined to 54.1 in February, compared with 54.5 the previous month. The index remains well above the neutral 50.0 level but growth momentum in the emirate is slowing compared with the average PMI reading of 55.4 recorded over the course of 2022. This is in keeping with our Dubai GDP growth forecast of 3.5% this year from an estimated 5.0% last year. February’s headline PMI score marked the lowest since February 2022, and while output ticked up to a five-month high, most of the other subcomponents weakened. New orders growth slowed to the slowest pace since January last year, which suggests there could be some more softening on the headline reading down the line, but it did remain comfortably expansionary. With new orders growth slowing and firms citing competitive pressures, the pace of hiring slowed with a marginal expansion in headcount.

S&P Global Dubai PMI

Source: Emirates NBD Research

With regards prices, input costs accelerated at the fastest pace since July, driven by shipping and materials costs. Despite the acceleration in their input cost rises, businesses continued to cut prices in order to remain competitive, albeit at a slightly slower pace than in January. Firms remained positive nevertheless, with business optimism rising to an eight-month high.

Travel & Tourism

Travel & tourism was the strongest performing of the three individual sectors covered by the survey for the second month running as it rose to 55.3, from 55.1. This was the highest reading for the sub-index since August. New orders slowed, but this was offset by a sizeable gain in output. Nevertheless, business expectations softened compared with January and hiring was marginal. Firms increased their discounting as they sought to remain competitive.


Construction also recorded a higher headline reading in February than in January as it rose to 55.2, from 54.6 the previous month. New orders accelerated for the construction sector, hitting a multi-year high, and there was greater pricing power for firms as they increased their prices charged in February after two months of discounting in December and January. Output was at the highest level since June 2019 but business optimism declined even as firms ramped up their hiring.

Wholesale & Retail

Wholesale & retail was the only sector to see a slowdown in February as it fell to 54.2, from 54.7, thereby weighing on the headline Dubai index. Firms continued to cut prices sharply to encourage business, with prices charged falling by the greatest degree since October. Nevertheless, new orders slowed to an eight-month low. Input costs rose for the first time in three months, albeit marginally, while there was a slight improvement in business sentiment.

Written By

Daniel Richards Senior Economist

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