The S&P Global PMI (Purchasing Managers’ Index) survey for Dubai slipped to 56.6 in January, exactly level with the UAE survey released earlier in the week.

For Dubai, this marked a four-month low for the index as it came down from the 16-month high of 57.7 recorded at the close of 2023, but the measure remains indicative of an economy that is expanding strongly, and it remains above the long-run series average, said Emirates NBD Research.

The pipeline of new work continues to expand rapidly even if at slightly softer pace than seen in December and Emirates NBD forecast real GDP growth of 4.0% in Dubai this year, unchanged from its 2023 estimate.

There are some indications of a softer outlook, however, and the strong growth in output and orders was supported by ongoing discounting as firms cut their output prices for the 18th month running. Firms did increase staffing levels in January but only marginally and at a slower pace than in December, with many reporting that there was no need to increase workforces even with higher workloads.

Business optimism fell back to the lowest level since December 2022 as respondents to the survey noted that the diversion of ships from the Red Sea could impact their supply chains. Any impact has not been acute so far as input costs accelerated only modestly in January.