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Dubai PMI slips but still strong in May

Daniel Richards - MENA Economist
Published Date: 09 June 2023


The S&P Global PMI survey for Dubai slowed in May, with the headline reading at 55.3, down from the eight-month high of 56.4 registered in April. This is in line with the slowdown registered by the headline UAE index released earlier this week. However, while slower, both readings remain well above the neutral 50.0 level, indicating an ongoing expansion in the non-oil private sector. This is reflective of the ongoing outperformance of the local economies compared with much of the rest of the world, and while we expect that growth will slow through the year as high interest rates and a global slowdown weigh on demand, our forecast for GDP growth in Dubai this year remains robust at 3.5%.

UAE PMI and subcomponents

Source: S&P Global, Emirates NBD Research

Looking at the subcomponents of the Dubai PMI, output accelerated to the fastest pace since August last year, and businesses expect that this will be maintained on the back of ongoing strong growth in new orders, albeit at a slightly softer pace than the previous month. This contributed to an uptick in business confidence which rose to the highest level since March 2020 in May, and firms were hiring at the fastest pace since the start of 2018. Input prices rose more rapidly in May, but still at a fairly marginal pace and far off the recent highs seen in the middle of last year.Firms continued to build up their inventories in order to cope with strong new orders. Softer prices pressures have enabled firms to continue cutting their output prices in a bid to shore up demand, with prices charged falling for the 10th month in a row.

Travel & tourism

The travel & tourism sector’s PMI slowed to 56.2 in May, from 56.5 in April. This was still the second-highest reading since August, however, and the Dubai tourism sector remains in robust good health, as evidenced by the 18% y/y rise in visitors over the first four months of the year. Output accelerated in May, but new orders dipped slightly, while remaining strong. Input costs were negative for the second consecutive month, enabling firms to continue discounting, albeit at a slightly softer pace than in April. Business expectations rose sharply to the highest level since September 2022.


The construction sector was the only one of the three individual sectors covered by the survey which saw a rise in its PMI in May, coming in at 60.4, from 58.7 in April. New orders rose and there was a marked increase in employment as firms looked to deal with increasing demand. Input prices accelerated, but businesses continued to discount to their customers for the third month in a row.

Wholesale & retail

The wholesale & retail sector’s PMI dipped to 55.3 in May, from 56.4 previously. Output accelerated but the pace of growth in new orders fell from the six-month high recorded in April. Nevertheless, firms ramped up their hiring at the fastest pace since May 2019 to meet the strong demand. Business optimism rose to the highest level since prior to the pandemic, but remained below the series average.