Dubai Business Activity Barely Grows With Restrictions Reimposed

(Bloomberg) -- Non-oil companies in Dubai increased output for the second month in a row in January but the uptick was marginal in the emirate where authorities have reimposed some restrictive measures imposed to curb the spread of Covid-19.

The non-oil private sector economy in the Middle East’s business hub improved fractionally last month, according to IHS Markit. While its Purchasing Managers’ Index fell to 50.6 in January from 51 last month, driven by a decrease in output and new orders, the gauge still remained above the 50 mark that separates growth from contraction.

Employment figures in Dubai showed an uptick for the first time in about a year, and at the quickest pace in 14 months as companies expressed optimism toward future business. The overall employment indicator was still below the 50 mark.

“Despite sales growth near-stalling, non-oil companies in Dubai increased output for the second month in a row in January,” wrote David Owen, economist at IHS Markit. “With confidence for 2021 also improving due to the rapid vaccine roll-out in the UAE, employment rose for the first time in nearly a year, after the pandemic drove record declines during the second quarter of 2020.”

More from IHS Markit:

• Almost all sectors reported growth, except for travel and tourism, which saw a drop in business fueled by tighter global travel restrictions.
• The wholesale and retail sector was the top performer and primary driver for employment.
• Some companies cited increasing client demand and optimism was at the highest since September but still at one of the weakest levels on record.
• The demand side was weak as sales growth softened to the slowest at the current eight-month sequence of expansion.
• Input costs dropped for the first time in six months, at the fastest rate since April.

“Uncertainty surrounding the near-term economic outlook and the prospect of tighter pandemic measures meant that output expectations across Dubai’s non-oil sector remained subdued in January, despite picking up from the end of 2020,” Owen wrote.

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