March PMI data indicates growth surges across Dubai non-oil economy

March PMI data indicated a further surge in growth across the Dubai non-oil economy, as output picked up at a marked rate in response to stronger new business intakes. A boost in supplier performance meanwhile enabled firms to expand their inventories for the first time in four months.

Confidence in future activity rose to the highest since December, despite a concurrent uplift in cost pressures as energy and raw material prices surged.

The headline S&P Global Dubai Purchasing Managers’ Index (PMI) is derived from individual diffusion indices which measure changes in output, new orders, employment, suppliers’ delivery times and stocks of purchased goods.

The survey covers the Dubai non-oil private sector economy, with additional sector data published for travel & tourism, wholesale & retail and construction.At 55.5 in March, the seasonally adjusted S&P Global Dubai Purchasing Managers’ Index (PMI) was at its highest level since June 2019, rising from 54.1 in February and for the second month in a row.

The index suggested that the health of the non-oil private sector had improved sharply, and to a greater extent than seen on average over 12 years of survey data.

Dubai businesses signalled a boost to client demand in March, often linked to the lifting of COVID-19 measures and improving confidence. New business growth accelerated to a sharp pace, albeit remaining slightly weaker than the recent highs at the end of 2021. Subsequently, output levels expanded to the greatest degree since July 2019, with more than a quarter of firms seeing an uplift since February.

Activity growth was particularly strong in the travel & tourism and construction sectors, where a rebound in international tourism and increasing numbers of building projects underlined marked rates of recovery.

David Owen, Economist at S&P Global, said: “The Dubai PMI moved clear of its previous post-lockdown high in March, registering the strongest performance in the non-oil sector since June 2019. The result rounded off another strong quarter in which relaxed pandemic measures and the Expo 2020 have brought increased economic activity and tourism demand.

“Output growth in both the travel & tourism and construction sectors also quickened to the highest since June 2019, with the latter driven by a strong drive among contractors to complete outstanding projects. Wholesale & retail activity likewise rose to a greater extent than in February.

“The global surge in commodity prices due to the war in Ukraine had an impact on Dubai businesses during March, with costs rising at the quickest rate in three months. While some firms opted to pass these expenses onto clients, the urge to support sales growth meant that average selling prices continued to fall.”