PMI: Tourism and construction support Dubai's economic recovery

The Purchasing Managers' Index (PMI) in the Emirate of Dubai recorded a slight increase in the reading for the month of March, reaching 51 points, compared with 50.9 points in February. The positive contributions to the reading of last month came from the indicators of new orders and the inventory of purchases, while the sub-components were presented. Production, staffing, and delivery times for suppliers have slight negative impacts on the overall trend.

According to the IHS Markit Group PMI, the construction, travel and tourism sectors improved in their key readings in March, with the former recording the strongest growth across the three industries under study.

Construction companies experienced the second largest increase in production since mid-2019, with some companies participating in the study saying that easing COVID-19 restrictions allowed project work to restart.

A study by the "IHS Markit" group stated that the non-oil economy in Dubai witnessed a rise in input price inflation at the end of the first quarter of this year 2021, driven by the increasing shortage of production requirements and companies' efforts to restock and increase global supply delays.

She explained that despite this, production continued to expand strongly, while new business rebounded after a slight decline in February, and companies remained confident of an increase in commercial activity next year as the economy recovers from the Coronavirus (Covid-19) pandemic.

At the level of the non-oil private sector as a whole in Dubai, recent data indicated an increase in production for the fourth consecutive month in March.

This was supported by a renewed increase in new applications, albeit only slightly.

However, while some companies saw an improvement in customer demand, others reported weak market conditions due to COVID-19 restrictions and strong competition.

Companies raised their inventory purchases again in March, after five months of declining until January.

However, a number of companies reported that they are facing a production input shortage linked to global supply problems in general, which contributed to extending supplier delivery times.

Commenting on the results of the latest study, IHS Markit economic researcher David Owen said that global supply difficulties worsened on the beaches of Dubai in March, as the reduced availability of production inputs led to the largest rise in prices in 28 months, and this will restrict margins. Profits because competitive pressures and efforts to help revive demand drive down production prices.

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