In its latest Purchasing Managers’ Index report for Dubai, the global rating agency noted that this sharp improvement in non-oil business conditions was supported by stronger growth in output, employment and stocks of purchases.

According to the index, PMI readings above the 50-mark show non-oil private sector growth, while those below 50 signal contraction.

In February, the PMI of Dubai stood at 54.1, while it was 54.5 and 55.2 in January and December 2022 respectively.

“The Dubai PMI picked up for the first time in three months in March, rising to 55.5 from a 12-month low of 54.1 in February, as companies reported greater efforts to build supply-side strength in light of a further rapid expansion in activity levels,” said David Owen, a senior economist at S&P Global Market Intelligence.

He added: “The subsequent increases in staffing levels and inventories of materials and components were the sharpest seen in around five years, allowing firms to increase their output to the greatest extent for six months.”

The report, however, added that wholesale and retail growth reached a 14-month low in March, as that sector, along with the travel and tourism industry, lost momentum from their post-COVID peaks in 2022.

“A further slowdown in new business growth shows that demand growth is continuing to weaken from its post-COVID peak, with notable slippage seen in the wholesale and retail and travel & tourism sectors,” said Owen.

He said this suggests that rapid activity growth may not be sustained, which was reflected in a slight drop in future output expectations

According to the report, construction firms in Dubai witnessed a strong output expansion in March, the largest since September, with new orders rising sharply, along with accelerating employment growth.

The report added that the level of positivity among business owners was down slightly in March compared to February, with only 10 percent of survey panelists projecting growth of output over the next 12 months.