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Dubai’s non-oil sector grew at its fastest rate since September as companies built up capacity levels to support output expansion.
The headline index of the S&P Global Dubai Purchasing Mangers’ Index (PMI) increased do 55.5 in March, up from 54.1 in February, with any score above 50 indicating expansion.
However, companies surveyed said new orders rose to the least extent since January 2022.
The report said the index signalled a sharp improvement in non-oil business conditions, with the uptick supported by stronger growth in output, employment and stocks of purchases, alongside tighter supply side conditions.
Wholesale and retail growth reached a 14-month low, as that sector, along with travel and tourism lost momentum from their post-COVID peaks in 2022, the report said.
But, rising output meant that firms had a greater need to expand their business capacity in March.
The pace of job creation picked up to the fastest since January 2018, though was still modest overall.
Construction firms saw a particularly strong output expansion, the largest since September, with new orders rising sharply, with inventory and employment growth also accelerating.
Firms purchased greater volumes of raw materials to service new and current projects, meaning input stocks grew at their fastest rate since May 2018.
Supplier delivery times continued to shorten as vendors worked to tighter customer requirements, though the rate of improvement slipped from February’s three-and-a-half-year record and was only marginal.
The latest survey data signalled an additional increase in construction input prices during March, including rising prices of fuel, cement and iron, as well as a slight uptick in staff wages.
Overall, firms said they were maintaining robust sales volumes by offering price discounts to customers, and the degree of positive sentiment towards future activity was ‘relatively mild’ in March, with 10% of survey panellists projecting growth of output over the next 12 months.
David Owen, Senior Economist at S&P Global Market Intelligence, said that while the Dubai PMI headline index had picked up from February to March, there was ‘notable slippage’ seen in the wholesale and retail and travel and tourism sectors.
“This suggests that rapid activity growth may not be sustained, which was reflecting in a slight drop in future output expectations,” he said.
(Reporting by Imogen Lillywhite; editing by Seban Scaria)
