Dubai: Businesses in Dubai are recording ‘faster’ increases in new orders, setting them up for a strong finish to the year even as the Israel-Gaza situation throws a shadow on the wider Middle East and its economies.
In fact, Dubai’s private sector was reporting their best intake of new orders since June 2019. But when it comes to hiring, businesses are being extremely cautious of what it would mean to their costs.
In Dubai, the travel and tourism sector is having a strong start to the fourth quarter, while retail and wholesale too is seeing significant sales growth, according to the October PMI (Purchasing Managers Index) data issued by S&P Global.
Retailers - store operators and those online - have been bringing forward their end-of-year promotions, and already specific categories are seeing significant discounts being offered. This month's Black Friday period could set off a major spike in sales, with consumers feeling relatively bullish about prospects for 2024.
The October PMI is the second highest score since June 2019.
Business confidence
Those bullish sentiments are clearly rubbing off on businesses too - confidence about the immediate future is running at its highest levels since February 2020 (just before Covid intervened). This is what the S&P Global report has to say: "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."
In the construction and project sector too, industry sources talk up their chances in 2024. New contracts are coming through, including projects for blue-chip entities. They also point to the launch late last month of the Abu Dhabi master-developer Aldar's first project - a multi-dirham community called 'Haven' - in Dubai. And with it the promise of big-ticket contracts. (Another positive has been the fact that the Dubai MEP firm Drake & Scull International staved off liquidation.)
"Forward-looking indicators suggest that the expansion could step up further in the months ahead," said David Owen, Senior Economist at S&P Global Market Intelligence. "This included business activity expectations which climbed to the highest since February 2020, prompting firms to accumulate stocks of purchases rapidly.
The only lagging indicator is employment which dropped to a 13-month low
Going slow with hiring
But Dubai businesses were taking a much slower approach on adding new jobs. Costs obviously was a factor in this, while many businesses may already have built up their optimum workforces in the first part of the year, when hiring activity was relatively brisker.
"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. "The sharp increase in new order volumes suggests that firms will need additional labour in the coming months, although this depends on how much capacity they can build with existing workforces."
"This was often linked to an uptick in supplier prices amid higher demand for materials," according to S&P Global. "Firms reduced their output prices slightly in line with reports of strong competition."
