Growth in Dubai’s non-oil sector accelerates in October

Image courtesy: Rustam Azmi / Getty Images

Business conditions in Dubai expanded further in October as new business intakes accelerated at the fastest in four years with the upturn seen widely across key sectors, according to a study by S&P Global.

The seasonally adjusted S&P Global Dubai Purchasing Managers’ Index rose to 57.4 from 56.1 in September and remained firmly above the 50 mark, which signals growth in activity.

Indicative of a sharp improvement in business conditions across the non-oil economy, the reading was also the second highest since June 2019.

“Demand momentum in the Dubai non-oil economy is on a steamroll in the latter part of the year, with October PMI data signalling that strong market conditions drove the sharpest rise in new business since June 2019,” David Owen, senior economist at S&P Global Market Intelligence said in a statement.

Owen emphasized that the uplift was steered by accelerations in multiple sectors, which adds further confidence that non-oil growth will be robust in the fourth quarter.

S&P Global said that the rate of sales growth was the most marked in over four years, as the businesses that were surveyed frequently reported new clients and improving market demand. The firms also highlighted that price discounts pushed up sales.

Furthermore, improvements on the demand side supported another sharp rise in business activity across the non-oil private sector economy in October with the pace of output growth even ticking up to a three-month high.

Business optimism and expectations for future activity growth in the city’s non-oil private sector hit its highest since February 2020.

“Bolstered by improving demand momentum, over 36 per cent of surveyed firms gave a positive prediction for output over the coming 12 months, with sub-sector data indicating that wholesale and retail companies were the most confident,” said S&P Global

The survey, however, showed that firms are a bit cautious when it comes to hiring, with data indicating a slight jump in employment that was the weakest in just over a year.

“The only lagging indicator is employment which dropped to a 13-month low and indicated only a marginal rise in staffing during October,” said Owen.

Dubai accelerates economic growth

Dubai’s economy expanded by 3.2 per cent in the first half of 2023 to reach Dhs223, driven by a 3.6 per cent growth in the second quarter of the year as the emirate is pursuing its ambitious D33 economic growth strategy, which seeks to boost foreign direct investment to Dhs650bn by 2033.

The mammoth economic plan aims to attract an average of Dhs60bn in FDI annually over the next decade, from Dhs32bn annually in the last decade. It envisages increasing foreign trade to Dhs25.6tn for goods and services from Dhs14.2tn in the last 10 years.

Dubai Government approved a budget of Dhs246.6bn up until 2026 earlier in November.

The expenditure for the fiscal year 2024 alone is estimated at Dhs79.1bn, seeks to accelerate economic growth, support the objectives of D33 and consolidate its position as a global economic powerhouse.

The emirate is expected to achieve public revenues of Dhs90.6bn, of which Dhs85.1bn have been allocated to the budget, and Dhs5.5bn to the general reserve.

Read: Dubai Government approves Dhs246.6bn budget for 2024-2026