Non-oil private sector businesses in Dubai saw a renewed fall in activity in November, as the impact of COVID-19 appeared to worsen amid rising global cases, according to the latest Purchasing Managers' Index (PMI) data from IHS Markit.  However, job shedding eased to the weakest seen in the nine-month downturn, it said.

Growth in new work eased to the weakest seen in five months, leading to a solid reduction in output. Meanwhile, sentiment regarding the next 12 months of activity fell to a new record low, amid increased worries about a slowing economic recovery, according to the PMI survey that covers the non-oil private sector economy.

The seasonally adjusted IHS Markit Dubai Purchasing Managers' Index posted at 49.0 in November, the lowest recorded since May. Falling from 49.9 in October, the reading signalled a quicker – but still marginal – decline in operating conditions.

"A renewed fall in output and slower sales growth were evident across the Dubai non-oil private sector in November, highlighting the possibility of a ‘doubledip’ economic downturn from the pandemic. COVID-19 cases have risen in the UAE and globally, leaving firms uncertain as to how restrictions may impact new business in the near future,"  David Owen, Economist at IHS Markit, said.

"However, news about effective vaccines could restore long-term optimism, as firms are likely to place greater hopes of a strong recovery in 2021," he added.

According to the IHS Markit survey, firms in the Dubai non-oil sector gave an even worse outlook for the year ahead in November. Falling to a new record low, business expectations were also negative for the first time since this series began in April 2012.

Despite greater concerns about the business outlook, employment continued to stabilise in the latest survey period, with data signalling the weakest fall in workforce numbers in the current nine-month downturn. This was helped by successive rises in new business, especially in the wholesale and retail sector.

"Job numbers were stabilising in November, to signal that the impact of cost-cutting efforts on payrolls has started to ease. However, a possible hit to demand from falling customer numbers or renewed lockdown measures could lead to another setback for employment in the short-term," Owen said.

(Writing by Seban Scaria seban.scaria@refinitiv.com ; editing by Daniel Luiz)

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