Business conditions in Dubai remained “strongly depressed” in August, with job cuts rising from the previous month and companies dropping their selling prices at the fastest rate since October last year, according to the latest data.
The seasonally adjusted IHS Markit Dubai Purchasing Managers’ Index (PMI) dropped to 50 during the month from 51.7 in July, signalling a slower and only marginal improvement in business conditions.
This is partly due to weaker growth in output and new business. Among the businesses monitored, those in construction and wholesale and retail posted softer improvement, while those in travel and tourism registered a downturn in business conditions.
“Dubai’s non-oil economy saw a disappointing slowdown in growth in August, as the PMI fell for the first time since April,” noted David Owen, economist at IHS Markit.
“Business activity rose solidly, but the expansion was markedly weaker than in July, which will dent hopes of a swift recovery from the COVID-19 pandemic,” he added.
Owen said that demand in Dubai hasn’t returned to normal or pre-pandemic levels, with many businesses saying that conditions remained “strongly depressed.”
“Demand weakness drove a further cut to jobs in August, the sixth as many months and one that was broadly level with the trend over this COVID-affected period. Business optimism weakened, with some firms expecting activity to improve but others citing that the unpredictability of the recovery could lead to business closures.”
The headline IHS Markit PMI for Dubai is based on a survey that covers the non-oil economy.
IHS Markit also noted that companies in Dubai resorted to more job cuts in August, as they continued to reduce capacity and overhead expenditures.
Business sentiment toward future output also weakened, dropping to the lowest in three months, while input costs increased midway through the third quarter, although the inflation rate was weaker.
“At the same time, firms put further pressure on margins by lowering selling prices in a bid to improve new business,” IHS Markit said.
(Reporting by Cleofe Maceda; editing by Seban Scaria)
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