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Business conditions in Dubai-based non-oil firms indicated a stronger improvement in February after the Omicron wave stymied demand at the turn of the year, according to a new business survey.
While business activity continued to expand, employment opportunities only rose slightly and non-oil firms in the emirate still encountered logistical challenges amidst the pandemic.
The seasonally adjusted IHS Markit UAE Purchasing Managers' Index (PMI) rose to 54.1 in February, after easing to a four-month low of 52.6 in January, to signal a strong improvement in operating conditions in the non-oil economy.
According to IHS Markit, the 1.5-point rise was largely driven by the New Orders Index, with only small fluctuations seen in the other four components of the PMI.
The travel and tourism industry led the upturn in sales, posting strongest growth since 2019, as travel restrictions eased. New business rose solidly in the wholesale & retail sector, while construction firms noted a modest increase in new work, IHS Markit said.
David Owen, Economist at IHS Markit, said: "New business growth in Dubai returned to the strong levels seen at the end of last year in February, in a promising sign that the Omicron variant has had only a minor impact on the economy compared to previous waves of the pandemic."
The travel and tourism industry in Dubai led the upturn in sales, posting strongest growth since 2019
“The rebound was most notable in the travel & tourism sector which saw the fastest growth in new business since June 2019. A loosening of global travel restrictions should help the tourism industry further in the final weeks of the Expo and throughout the rest of 2022,” he added.
Output levels in the non-oil private sector rose sharply over February, although the rate of expansion ticked down to a five-month low. Delays in the arrival of freight shipments continued to constrain activity, according to some panelists. Meanwhile, increased travel activity and construction projects continued to support overall growth.
Dubai non-oil firms continued to show a modest degree of confidence in future activity. “Overall sentiment picked up from January's eight-month low but remained weak in the context of the series history,” IHS Markit said.
(Reporting by Seban Scaria; editing by Daniel Luiz)
