Emirate’s non-oil private sector income expands
▶ Improvement was largely driven by an increase in new work last month
Dubai’s non-oil private sector economy expanded for the first time in five months in July, marking the beginning of a post Covid-19 pandemic recovery as the number of infections declines and the emirate eases restrictions on businesses.
The seasonally adjusted IHS Markit Purchasing Managers’ Index reading for Dubai rose to 51.7 in July from the neutral 50-threshold in June.
A reading above the 50-mark indicates economic expansion while anything below points to a contraction.
“July PMI data for the Dubai non-oil private sector signalled the start of a post-Covid-19 recovery ... [and was] driven by stronger expansions of activity,” said IHS Markit economist David Owen. “Companies responded by raising purchases solidly and at the fastest rate in seven months.”
Improved business conditions were largely driven by a solid increase in new work received by Dubai companies in July. This increased at the fastest rate since November.
Consumer demand continued to pick up as the government further eased curbs put in place to slow the spread of the virus. The reopening of tourist destinations and the resumption of international flights helped generate additional sales, according to the survey.
Dubai’s economy has faced headwinds over the past few months as a number of industries including tourism, trade and property slowed after the government introduced movement restrictions.
However, the emirate unveiled several economic measures to help businesses recover. Last month, Dubai announced a Dh1.5 billion economic stimulus package, bringing the total support extended to companies to Dh6.3bn.
The improvement in business activity last month was broad-based across the monitored sectors, led by construction, wholesale and retail.
Travel and tourism lagged behind in terms of output growth but recorded the first improvement in five months amid government efforts to restart the sector.
Dubai, a trading and financial hub in the Arab world, opened its doors to international visitors on July 7 and expects its tourism industry to rebound this year as other countries begin to ease travel restrictions, Helal Al Marri, director general of the Dubai Department of Tourism and Commerce Marketing said last month.
The DTCM said on Monday that there were “green shoots” of revival in Dubai’s tourism and hospitality industry after the emirate opened its doors to international visitors.
Jumeirah hotels said its online bookings doubled in the week after the re-opening, compared with the previous week. Its properties registered an average daily increase of 109 per cent in the number of booked room nights.
Dubai businesses also reported a healthy expansion in output at the beginning of the third quarter, with the rate of growth quicker than that of June and the best this year. Companies also took on new projects and increased the level of their marketing activity, according to the IHS Markit survey.
Employment fell for a fifth consecutive month in July, but job losses eased back from June. Despite an improvement in sales, many companies said they lowered costs to ease pressure on margins, while others said their cash flow was still too weak to maintain current workforce numbers.