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Dubai’s non-oil economy sees an upward trend

The S&P’s Purchasing Managers' Index notes that the growth of Dubai’s non-oil private sector was at its second-fastest pace in July this year.

[Source photo: Anvita Gupta/Fast Company Middle East]

Dubai’s non-oil sectors are experiencing a sharp uptick, according to the S&P’s Purchasing Managers’ Index (PMI) report. Besides construction, travel and tourism are among the key sectors leading this growth.

The Index rose from 55.7 to 56.1 in May and is at its highest since June 2019. The report also recorded the output subindex at 62.5, rising from June’s 60.7. This is above the series average of 57.5 and is the joint-highest for the year.

“The Dubai PMI continued to trend upwards in June, further strengthening new business and activity. Travel demand continued to support sales, and there was a renewed increase in new work in the construction sector,” said David Owen, an S&P economist.

As per the report, travel and tourism saw a strong rebound after the pandemic-led restrictions eased up. Similarly, robust customer demand was seen as the key reason behind the growth in output.

“With demand strengthening, operating capacities came under pressure, but businesses reacted to this squeeze by continuing their hiring efforts,” Owen added. This has increased the focus on hiring new talent in Dubai’s private companies.

The report notes that the output among non-energy firms has risen for the 20th successive month. The growth rates have accelerated since June across the monitored sectors, and wholesale and retail, travel and tourism, and construction were among the fastest growing.

However, rising inflation is gradually impacting the prices. The input prices have been at the highest since early 2018.The biggest challenge facing UAE non-oil businesses is inflation. While the latest results pointed to a softer upturn in overall input costs, the rate of increase was nevertheless the second-strongest in four-and-a-half years amid global shortages of inputs and greater prices for fuel, materials, and shipping,” Owen said.

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