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Dubai - Non-oil private sector’s 12-month outlook exudes cautious optimism, says IHS Market survey report

Non-oil private sector business conditions in Dubai continued to strengthen for the third consecutive month in February, as output and employment numbers rose amid growing confidence among firms for a strong economic recovery in the current financial year (FY) 2021, according to the latest Purchasing Managers’ Index (PMI) data released on Tuesday.

The PMI, which is derived from individual diffusion indices which measure changes in output, new orders, employment, suppliers’ delivery timeline and stocks of purchased goods, stood at 50.9 in February, a marginal improvement from 50.6 in January.

Across the three monitored sectors of travel and tourism, wholesale and retail and construction, output growth was strongest in construction, followed by wholesale and retail. But, the travel and tourism sector bucked the trend with a further decline in activities due to fresh restrictions on mobility, according to the IHS Markit survey report released on Tuesday.

David Owen, an economist at IHS Markit, said new business inflows dropped for the first time since last May in February but the overall fall in sales was only mild and has not deterred firms from increasing output and employment.

“The successful roll-out of Covid-19 vaccines in Dubai gave firms an increased optimism for growth in business activities over the coming 12 months," said Owen.

Job creation

Dubai firms were optimistic that disruption to economic activity would be temporary, and that the roll-out of Covid-19 vaccines could lead to a sharp rebound in output later in the year.

The PMI businesses also reported a further round of job creation, after employment rose for the first time in 11 months in January.

Companies were able to stock more inputs, leading to the first increase in inventories since last August, IHS Markit said.

Input cost inflation resumed in February, following a slight decline in operating expenses in January. Consequently, the rate of price discounting by businesses in Dubai was the softest since August 2019, it added.