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Dubai PMI rises to two-year high in October

Khatija Haque - Head of Research & Chief Economist
Published Date: 09 November 2021


Dubai’s PMI rose to 54.5 in October from 51.3 in September on the back of a surge in business activity and strong new work growth last month.  Firms attributed the stronger demand to the return of tourists and the start of Expo 2020.  Business activity rose at the fastest rate since July 2019.  However, increased output and new orders led to only a modest rise in private sector employment in Dubai.  Input cost inflation was slight and supplier delivery times improved last month.  Firms reduced selling prices again in a competitive market.  Businesses were the most optimistic about their future output than they have been since before the pandemic.

Dubai PMI survey components

Source: IHS Markit, Emirates NBD Research

Of the three key sectors surveyed, wholesale and retail trade saw the biggest improvement in business conditions last month, followed by travel and tourism and then construction.

The wholesale and retail trade index rose to 55.0 in October, the highest reading since July 2019, as activity and new work rose sharply.  Price discounting may have contributed to the strong growth in business activity however, as firms reduced selling prices even as their input costs rose last month. Employment in the sector also increased in October, at the fastest rate since May 2019.

Dubai PMI: Wholesale and retail trade sector survey

Source: IHS Markit, Emirates NBD Research

The travel and tourism sector benefitted from the resumption of flights from key markets, with both activity and new work rising at a faster rate than in September.  Employment in the sector rose in October after declining slightly in September. Both input costs and prices charged by firms in this sector declined last month, and businesses were much more optimistic about their future output than they have been in recent months.

The construction sector saw another sharp rise in business output in October, but the pipeline of new work saw only a modest improvement after declining in September. Input costs increased for 11th consecutive month, and some of this was passed through to customers through higher selling prices. Supplier delivery times shortened last month which suggests that supply chains are improving. Firms in the sector were the most optimistic about their future output than they have been since last July.

The Dubai PMI survey for October is broadly in line with what we saw in the whole UAE PMI report last week – a sharp improvement in business conditions in the private sector at the start of Q4 2021.  We expect a faster rate of growth in Q4 relative to earlier in the year, and we expect this to be sustained through Q1 2022 as global travel restrictions continue to be relaxed.