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Khatija Haque - Head of Research & Chief Economist
Published Date: 09 May 2023
Consistent with the improvement in the UAE PMI in April, the S&P Global Dubai PMI rose to 56.4 last month from 55.5 in March, the highest reading since August 2022. Both output and new work grew sharply last month, and firms increased headcount modestly as well. However, there was significant price discounting in April, which may have helped to boost the new orders and activity. Encouragingly, input costs were largely unchanged from March.
Source: S&P Gobal, Emirates NBD Research
The growth in new work and business output was especially evident in the wholesale & retail trade and tourism & hospitality sectors. Price discounting in the wholesale and retail trade sector was the steepest on record, while input costs were largely flat. Business optimism in the sector eased further in April, despite activity and new work rising to a six-month high.
Source: S&P Global, Emirates NBD Research
The tourism sector likely received a boost from Eid holidays in April, with activity and new work rising sharply, the latter at the fastest pace in eight months. There was some price discounting in the travel and tourism sector in April, but not to the same extent as in the trade sector.
Construction was the laggard of the three sectors surveyed in April, with the sector index falling to 53.2 from 54.8 in March. Output rose at a slower rate last month relative to March, and new work growth and hiring both slowed.
Dubai’s non-oil private sector has seen solid growth in the first four months of this year, with the PMI averaging 55.1 compared with 54.2 in the same period last year. Looking ahead however, we expect the pace of growth to moderate through the rest of the year as higher borrowing costs and a weaker external backdrop weigh on domestic activity. We still expect Dubai’s economy to expand 3.5% this year.
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