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PMI weakens to near four year low in Dubai

Christian Fernsby ▼ | February 11, 2020
Dubai's non oil private sector economy saw a further weakening of sales growth in January, which slowed to a near four year low, prompting a much softer expansion in output and falling job numbers.
Dubai airport
Business in the Middle East   Business expectations deteriorated further
Business expectations deteriorated further, while output charges were again lowered amid efforts to reinvigorate new orders.

Topics: PMI Dubai

The headline IHS Markit 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.

The seasonally adjusted IHS Markit Dubai Purchasing Managers' Index™ (PMI®) fell from 52.3 in December to 50.6 in January, signalling the weakest improvement in the health of the non-oil private sector since February 2016.

Growth primarily eased due to a weaker expansion in business activity and subsequent drop in job numbers.

At the sub-sector level, there was a modest improvement in the travel & tourism industry.

However, deteriorations in the construction and wholesale & retail sectors placed downward pressure on the headline index.

Output in the Dubai non-oil economy expanded only modestly at the start of the year.

The rate of growth slowed to the weakest in the current 47-month sequence.

According to surveyed firms, activity was subdued by soft new business volumes.

New orders followed a similar trend to output, with latest data indicating the weakest increase in demand for nearly four years.

According to panellists, this was mainly due to slow market conditions.

Weaker demand growth impacted hiring activity in January, with employment falling for the first time since last August.

Staff numbers were reportedly lowered in order to streamline costs.

The rate of job losses was marginal but nevertheless the jointstrongest in the ten-year series history.

Meanwhile, average prices set by non-oil private sector firms declined further at the start of 2020, as has been the case in each month since May 2018.

However, the drop in prices was the softest for four months.

Despite some companies raising salaries, the overall increase in cost burdens was marginal in January.

In particular, firms noted little pressure on purchase prices due to soft market demand.

Input stocks continued to increase during the month, extending the current run of growth that began in November 2018.

However, the pace of expansion was the softest for four months.

Meanwhile, firms registered a second successive month of improving delivery times, albeit one that was only modest.

Lastly, business expectations slipped in January on the back of softer activity growth.

That said, firms generally regarded the coming 12 months with optimism, citing hopes of market stabilisation and new projects in the year ahead.