Dubai non-oil business conditions broadly unchanged; rise in activity expected
Dubai's non-oil private sector registered the slowest output growth in five months according to the October PMI survey, signalling a setback for the economic recovery.
At 49.9 in October, the seasonally adjusted IHS Markit Dubai Purchasing Managers' Index (PMI) indicated that business conditions across the non-oil private sector were broadly unchanged over the month. Falling from 51.5 in September, the reading also signalled an end to the run of growth observed throughout the third quarter of the year.
Firms saw only a slight rise in new work, while job shedding quickened from September but remained softer than in the prior six months.
Most notably, the degree of positive sentiment regarding the year-ahead outlook for activity fell to its lowest since this index began in April 2012, IHS Markit said.
Businesses in Dubai reported the weakest rise in activity in the last five months of expansion during October, which was in part due to a softer - and only marginal - upturn in new orders.
Some companies noted they were unable to expand further whilst markets remained subdued. Additional sector data showed falls in output in both travel & tourism and construction.
David Owen, Economist at IHS Markit, said: "After a robust quarter of growth for the Dubai non-oil economy, October data pointed to a more subdued picture as overall business conditions were left broadly stable. Businesses also showed weaker optimism towards the economic recovery from COVID-19, amid reports of weak demand and uncertainty about the future impact of the pandemic on activity and jobs."
With the recovery fading, and uncertainty building about the future impact of the pandemic, output expectations fell to the lowest on record in October.
"Output levels declined in the construction and travel and tourism sectors, mostly due to a lack of new building projects and weak tourist numbers. Growth in the wholesale and retail sector was the softest in five months, signalling a broad-based slowdown across some of Dubai’s key sectors," he added.
Firms still expect a rise in activity in the coming 12 months, but the degree of positivity was only fractional.
Meanwhile, job numbers decreased across the private sector economy in October. The rate of contraction gathered pace from September, but was the second-weakest in the past eight months. Where job cuts were noted, firms often linked this to cost-cutting measures.
The headline IHS Markit Dubai PMI is derived from individual diffusion indices which measure changes in output, new orders, employment, suppliers’ delivery times and stocks of purchased goods.
The survey covers the Dubai non-oil private sector economy, with additional sector data published for travel & tourism, wholesale & retail and construction.
