Dubai: Businesses in Dubai are recording “faster” increases in new orders, setting them up for a good end to the year even as the situation between Israel and Gaza casts a shadow over the entire Middle East and its economies.
In fact, Dubai’s private sector reported its best intake of new orders since June 2019. But when it comes to hiring, companies are being extremely cautious about what this would mean for their costs.
In Dubai, the travel and tourism sector is having a strong start to the fourth quarter, while retail and wholesale trade is also seeing significant sales growth, according to October PMI (Purchasing Managers Index) data released by S&P Global.
Retailers (store operators and those online) have been bringing forward their end-of-year promotions, and significant discounts are already being offered to specific categories. This month’s Black Friday period could trigger a major surge in sales, with consumers feeling relatively optimistic about the outlook for 2024.
What is the October PMI score?
The October PMI is the second highest score since June 2019.
It’s clear that those bullish sentiments are also spreading to companies: confidence about the immediate future is reaching its highest levels since February 2020 (just before the Covid intervention). Here’s what the S&P Global report says: “Encouraged by improving demand momentum, more than 36 percent of companies surveyed gave a positive forecast for production in the next 12 months, and subsector data indicates that wholesale and retail companies were the most confident.”
Also in the construction and projects sector, sources in the sector talk about its possibilities for 2024. New contracts are being won, including projects for leading companies. They also point to the launch late last month of Abu Dhabi master developer Aldar’s first project – a multi-dirham community called ‘Haven’ – in Dubai. And with it the promise of expensive contracts. (Another positive has been the fact that Dubai MEP firm Drake & Scull International avoided liquidation.)
“Forward-looking indicators suggest the expansion could accelerate further in the coming months,” said David Owen, senior economist at S&P Global Market Intelligence. “This included business activity expectations reaching their highest level since February 2020, leading companies to quickly build up purchasing stocks.
The only lagging indicator is employment, which fell to its lowest level in 13 months.
– David Owen of S&P Global
Go slow with hiring
But Dubai companies were taking a much slower approach to creating new jobs. Obviously, costs were a factor in this, while many companies may have already built their optimal workforce in the early part of the year, when hiring activity was relatively more brisk.
“The only lagging indicator is employment, which fell to its lowest level in 13 months and indicated only a marginal increase in staffing during October,” Owen said. “The sharp increase in new order volumes suggests that companies will need additional labor in the coming months, although this depends on how much capacity they can build with the existing workforce.”
Watch your cost
“This was often related to an increase in supplier prices amid increased demand for materials,” according to S&P Global. “Companies slightly reduced prices for their products in line with reports of strong competition.”