DUBAI - The United Arab Emirates' non-oil private sector grew for only the second month this year in July, helped by the easing of coronavirus restrictions, a survey showed on Wednesday.
The seasonally adjusted IHS Markit UAE Purchasing Managers' Index (PMI), which covers manufacturing and services, rose to 50.8 in July from 50.4 in June. A number below 50 indicates a contraction.
"The rate of growth remained marginal and represented only a mild recovery from the downturn experienced by UAE businesses," the report said of the improvement in the past two months.
The UAE's oil-producing Abu Dhabi and tourism and trade-reliant Dubai had instituted coronavirus lockdowns earlier this year, and were also impacted by falling oil prices.
Output rose to its highest level since September 2019, with businesses reporting new projects and increased demand as drivers. The index marked a record low of 36.9 in April.
Employment, however, declined for the seventh month in a row, and "this acted as a drag on overall business conditions," said David Owen, economist at IHS Markit.
"Firms were reportedly able to cover the rise in new work with existing workforces," the report said, and although the pace of job losses declined, businesses continued to cut costs.
Respondents were therefore less optimistic about future output than last month, as concerns about the coronavirus and weak cash flow weighed on expectations. Some continued to be optimistic about improved demand and increased marketing.
"It was ... particularly evident that future output sentiment depended on how demand recovered in the coming months, as firms hope that the economy will make strides back to pre-COVID-19 output levels over the second half of 2020." said Owen.
(Reporting by Nafisa Eltahir; editing by John Stonestreet) ((Yousef.Saba@thomsonreuters.com; +971562166204))