Global Supply-Chain Glitches Hinder Dubai Business Activity

Business conditions in Dubai improved at a slower rate last month after global supply-chain constraints delayed the Middle East business hub’s recovery from the pandemic.

Dubai’s Purchasing Managers’ Index, compiled by IHS Markit, rose only slightly to 51 in March from 50.9 in the previous month, remaining above the 50 level that separates growth from contraction.

An increase in prices fueled by raw-material supply shortages led to the fastest acceleration of input cost inflation since late 2018. Still, companies lowered selling charges at the most pronounced pace in five months to stimulate demand. This was reflected by a reduction in staff levels for the first time this year, though the drop in employment was minimal.

“Global supply difficulties washed up on Dubai’s shores in March,” David Owen, an economist at IHS Markit, wrote in a release on Sunday. “This will constrain profit margins as competitive pressures and efforts to aid the recovery in demand led firms to lower output charges.”

Non-oil private sector activity in the city began to recover from the pandemic at the end of last year and has remained in growth territory since then.

Global Supply-Chain Glitches Hinder Dubai Business Activity

More from IHS Markit:

  • Output continued to expand solidly, while new work picked up after a slight decrease in February.
  • Companies remained confident of a rise in business activity in the coming year as the economy recovers from the pandemic.
  • Construction firms saw the second-sharpest increase in output since the middle of 2019 as some projects resumed following virus-related restrictions.
  • The travel and tourism sector saw an uptick in its headline reading but activity remained subdued due to global travel restrictions.
  • Outlook for future business activity among non-oil firms remained positive in March, although it fell from February’s five-month high.

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