Dubai's non-oil private sector economy expanded in July, thanks to an increased consumer spending that led to the joint-fastest rise in output since July 2020, a business survey showed.

The seasonally adjusted IHS Markit UAE Purchasing Managers' Index (PMI), which covers manufacturing and services rose from 51.0 in June to 53.2 in July, to indicate improvement in non-oil private sector business conditions.

Travel and tourism firms saw the most marked improvement in output growth since June, with wholesale and retail and construction also recording faster expansions.

Though business conditions remained subdued, firms recruited at the quickest rate in more than 18 months. While some companies raised their output charges due to higher costs, a greater number lowered their charges in spite of rising input prices due to global raw material shortages.

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David Owen, Economist at IHS Markit, said: "Growth in the Dubai non-oil economy re-accelerated in July, helped by a rise in customer numbers that boosted sales in the travel and tourism and wholesale and retail sectors. This was also a key driver of employment as firms frequently mentioned hiring sales staff, leading to the fastest rate of job creation since November 2019."

Firms signalled increasing pressure on capacity during July, as levels of outstanding work rose to the greatest extent for more than two years, the survey said.

However future business outlook remained subdued in July. Those firms that provided an optimistic outlook for the coming year said that economic recovery would depend on vaccine campaigns and Expo 2020 Dubai-related demand. The uncertain path of the pandemic and the impact of supply side problems dampened growth prospects.

"Businesses will be hoping to build on the economic recovery throughout the rest of the year. At 53.2 in July, the headline PMI was at its second highest in 20 months, to offer further reassurance that the economy is heading in the right direction,” Owen said.

(Reporting by Seban Scaria; editing by Daniel Luiz)

(seban.scaria@refinitiv.com)

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