The seasonally adjusted IHS Markit Dubai Purchasing Managers’ Index (PMI) rose to 51.5 in September from 50.9 in August.

The sector emerged from three months of contraction in June, when it settled at the 50.0 mark that represents no change.

The coronavirus crisis has badly hit vital economic sectors of Dubai, the Middle East trade and tourism hub.

While the data was below July’s reading and markedly below the series average of 54.7, it “indicated stronger increases in both output and new business across the private sector in September,” the report said.

“September PMI data finalised a third-quarter period of modest economic recovery in Dubai,” said David Owen, economist at survey complier IHS Markit.

The output sub-index rose to 53.8 in September from 52.7 in August. It peaked at 56.1 this year in July.

“On the downside, the PMI has failed to lift off or signal any strong rebounds in output so far, with firms often initiating price cuts in order to drive sales higher. Meanwhile, employment data signalled a cautious outlook as firms often shed workers to manage cost pressures and enable discounting,” Owen said.

The United Arab Emirates, with a tally at more than 105,000 infections and 443 deaths, has seen the number of daily new coronavirus cases surge over the past two months.

Business sentiment for the next six months improved slightly in the survey, though the outlook overall was relatively subdued and hopes of further growth were pinned on higher sales as lockdown measures are eased.

Owen said the rise in COVID-19 cases could lead to a dip in activity later this year.

“Firms will thus be wary of expanding too much or too quickly” he said.