DUBAI  - Dubai's non-oil private sector expanded for the second consecutive month in January, although at a marginal pace that was a fraction slower than the previous month as business activity and new orders softened.

The seasonally adjusted IHS Markit Dubai Purchasing Managers' Index (PMI) fell to 50.6 in January from 51.0 in December. That growth pace - just above the 50 mark that separates expansion from contraction - was well below the series average of 54.6.

The sector expanded in only six months of last year as the coronavirus pandemic pummelled the economy of the Middle East's tourism and commerce hub.

"Despite sales growth near-stalling, non-oil companies in Dubai increased output for the second month in a row in January. 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," said David Owen, economist at survey compiler IHS Markit.

The output sub-index, which measures business activity, slipped to 52.6 in January from 54.7 at the end of 2020.

COVID-19 cases in the UAE hit a record 3,977 on Feb. 3. But the country has one of the world's fastest vaccination rates per capita, which it hopes will help revive its vital travel, retail and real estate sectors.

Out of three sectors tracked by IHS Markit, travel and tourism was the only one to contract in January. Wholesale and retail was the main driver behind a marginal growth in employment, its first expansion since February 2020. The construction sector expanded slightly.

"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 said.

(Reporting by Yousef Saba; Editing by Catherine Evans) ((Yousef.Saba@thomsonreuters.com; +971562166204))