Non-oil private sector companies benefit from rebound in international travel
Dubai’s private non-oil sector saw a marked increase in business activity in November, driven by the largest increase in new business since July 2019, as companies benefited from a continued rebound in international travel and demand increased customers.
After peaking in two years in October, the seasonally adjusted IHS Markit Dubai Purchasing Managers’ Index (PMI) was unchanged at 54.5 in November, indicating the strongest joint improvement in operating conditions since October 2019.
“Expo 2020 continued to bring strong growth to Dubai’s non-oil economy in its second month, with the November PMI remaining at its highest level since October 2019, while new business growth reached its fastest level in more than two years. Travel and tourism appeared to benefit the most of the three sectors monitored, with wholesale and retail also firmly in growth territory, ”said David Owen, economist at IHS Markit.
Wholesale and retail trade also performed well, while the construction sector struggled with weak demand and supply side constraints.
After the strong increase in new business, output growth in the non-oil sector was also strong in November, despite a slight slowdown from the recent high in October.
Input purchases and inventory levels have also increased. Supplier performance continued to improve, following a further upturn in the previous month for the first time since the start of the year.
Some members of the survey panel showed that the discounts supported new order volumes in November. In fact, production costs have been lowered at a sustained rate, the fastest since September 2020. Companies that have cut prices cited efforts to stay ahead of their competition and gain new customers. Firms were helped by a further moderate rise in input costs, even as the inflation rate hit a three-month high.
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“Nonetheless, companies were reluctant to increase their number of jobs. In fact, workforce levels fell slightly for the first time since May. This has come as the outlook for future activity, although the ‘one of the highest seen in 2021, was moderate compared to pre-Covid trends, ”Owen said.
Looking ahead, Dubai’s non-oil companies continued to forecast increased activity over the next 12 months, with expectations often driven by an increase in new work at Expo 2020, IHS said on Sunday. Markit.
That said, the level of optimism has waned from the previous month and was low compared to pre-pandemic trends and the current rate of production growth, amid reports that the continuing threat of Covid-19 was keeping the moderate forecast. While the number of jobs in the non-oil sector fell – marginally – for the first time in six months.