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Dubai PMI unchanged at 54.5 in November

Khatija Haque - Head of Research & Chief Economist
Published Date: 12 December 2021

 

Dubai’s PMI was unchanged at 54.5 in November, signalling a solid improvement in business conditions last month. Business activity rose sharply, as did new work which increased at the fastest rate since July 2019.  This was attributed to a recovery in international travel, Expo 2020 related demand and discounted selling prices.

However, employment in the private sector was fractionally lower on average in November relative to October, with the employment index falling below the neutral 50-level for the first time since May.  Businesses remained optimistic about their future output over the next year, but the degree of optimism was lower than in October. 

Price pressures for businesses remain contained, with only a slight increase in input costs reported in November, while supplier delivery times improved for the second month in a row.  Firms reduced selling prices at the fastest rate in 14 months however, as they sought to remain competitive and support new work growth.

Dubai PMI and key survey components

Source: IHS Markit, Emirates NBD Research

Wholesale & retail trade sector sees strong activity growth in November

The wholesale & retail sector index rose to 55.5 in November from 55.0 in October, the highest level since July 2019.  Business activity and new work increased sharply, although some of this growth was likely due to substantial price discounting, even as input costs rose. Employment in the sector increased modestly last month.  Uncertainty about the post-expo outlook likely weighed on business expectations in the sector, with this index falling to a three-month low in November.

Travel & tourism sector benefits from recovering international travel

The travel & tourism sector index rose to 55.3 in November from 53.8 in October as new orders surged on the back of increased international travel. Business activity increased sharply, and firms in the sector increased staffing modestly as well. Input costs in the sector declined for the third consecutive month, and firms also reduced their selling prices at the fastest rate since last August.  

While optimism about the coming 12 months was high in November, the discovery of the new Omicron coronavirus variant at the end of last month, and the subsequent tightening of some travel restrictions, may weigh on the broader tourism recovery in the coming months.

Construction sector index declines to five-month low

While output in the construction sector increased sharply in November, the pipeline of new work grew only fractionally.  New work growth has been relatively muted in H2 21 and this has weighed on the headline index which fell to 52.0 in November from 53.1 in October.  Employment in the construction sector declined last month, the first decline in staffing since May. Encouragingly, input costs were broadly unchanged in November after increasing over the summer, and supplier delivery times shortened for the second month in a row. Firms increased selling prices for the third month in a row.

Dubai PMI sector indices

Source: IHS Markit, Emirates NBD Research

The November PMI survey supports our view that non-oil sector growth will be stronger in Q4 2021 than earlier in the year.  However, uncertainty about the outlook has increased with the discovery of the new Omicron variant at the end of last month, and this may slow new growth or deter firms from boosting hiring in the near term.