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Dubai PMI slips to seven month low in November

Khatija Haque - Head of Research & Chief Economist
Published Date: 13 December 2022


The S&P Global Dubai PMI slipped to 54.9 in November from 56.0 in October, the lowest reading since April.  While business output increased sharply again last month, the pace of new work growth slowed, weighing on the overall index. The weakness in new work growth was particularly evident in travel & tourism and wholesale & retail trade.

As activity remained robust, firms added to headcount for the seventh consecutive month. Inflationary pressures remained weak as input costs rose only slightly, and firms were able to modestly lower average selling prices as well. Firms remained optimistic about the outlook, but noted that the global economic slowdown has limited spending among some clients and made the sales environment more challenging.

Dubai PMI softens in Q4 2022

Source: S&P Global, Emirates NBD Research

Travel & tourism index fell by almost three points in November

The travel & tourism sector index fell to 53.2 in November, the lowest reading since January as both activity and new work growth slowed. While hotel occupancy data is not yet available for November, the October figures showed a modest decline in hotel occupancy on a y/y basis, as well as a -4% decline in revenue per available room. The PMI survey data showed that selling prices were largely unchanged in November, following three months of decline.  Firms in the sector were also the least optimistic about the outlook for the coming year than they have been since March, likely reflecting concerns about slowing external demand.

Wholesale & retail sector index slips to 55.5 in November from 58.0 in October

There were also signs of slower new work growth in the wholesale & retail sector last month, although business activity remained strong. Firms reduced selling prices as they have since April, but the rate of price discounting was the weakest since then. Supplier delivery times improved and input cost inflation was modest.

Still very little new work growth in construction

The construction sector index declined only modestly to 53.2 in November from 53.6 in October. Business activity remains high, reflecting ongoing work on current projects, but the pipeline of new work growth remains slow, averaging just under 51 for the last three months. Input costs were broadly unchanged in November, as were selling prices.  Business optimism remains relatively muted compared with H1 2022.  

Growth expected to slow next year

Overall, the survey is consistent with our expectation of slowing non-oil sector growth in the UAE as tighter monetary policy globally weighs on demand for goods and services. The strong US dollar has also likely contributed to softer external demand. However with US rates expected to peak in H1 2023, we expect to see some relief for the dollar in the second half of next year.

The latest official GDP estimates show that Dubai’s economy grew 4.6% y/y in the first nine months of the year, on track to achieve our full year growth forecast for the emirate of 5%. We expect growth to slow to 3.5-4.0% in 2023.