Dubai non-oil private sector growth weakens in June

Dubai’s non-oil private sector growth slowed further in June, according to the latest Purchasing Managers' Index (PMI) for June released on Sunday.

The seasonally-adjusted IHS Markit Dubai PMi fell for a second successive month from 51.6 in May to 51.0 in June.

Output growth in Dubai's non-oil economy slipped further in June, as a weaker rise in sales and supply shortages curtailed the sector's recovery. Input cost inflation accelerated as firms saw a mark-up in commodity prices, pushing output charges higher for only the second time in three years.

Both output and new orders rose to a lesser degree than in May, with the rate of output growth the slowest seen in the current seven-month sequence of expansion.

According to panellists, there was a general improvement in economic conditions as the impact of Covid-19 eased. However, this was countered by a slowdown in sales growth and reports from some firms that raw material shortages and price hikes had curbed work on new projects,” IHS Markit said.

"Business activity in the Dubai non-oil sector was hindered by weaker sales growth and raw material shortages in June, with the rate of growth slowing to a seven-month low. Both the Construction and Travel & Tourism sectors saw a reduction in sales, with restrictions on travel often mentioned as a drag on the economic recovery. Wholesale and retail was the only monitored industry to see a rise in new orders over the latest period,” said David Owen, Economist at IHS Markit.

"Input price inflation picked up in June, posting its second-highest level since December 2019. Lengthening delivery times, supply shortages and rising freight costs were often cited by panellists, leading to a second rise in output prices in three months following a near three-year run of decline," he said.

Business activity continued to rise across the construction and wholesale and retail sectors, but in both cases, the upturn slowed from the preceding month. Travel and tourism activity saw a renewed upturn after a slight decline in May, IHS Markit said.

Jobs data quickest since November 2019

But jobs data was quite promising as there were renewed efforts to increase employment numbers during June. In fact, the rate of job creation was the quickest since November 2019, but slower than the long-run series average.

With input costs rising, non-oil firms marked up their output charges for only the second time in 38 months, although the latest uptick was slower than that seen in April.

With competition increasing, some companies reduced their selling prices to attract new customers, weighing on the overall rise. Elevated input prices led some firms to lower their purchases and draw from current inventories to fulfil new orders. Challenges with shipping delays, meanwhile, meant that average lead times among suppliers lengthened for the fifth month running, IHS Markit said.

-waheedabbas@khaleejtimes.com