Dubai non-oil sector strengthens in September

Dubai - Sales increased at a solid pace overall while strong competition limited new orders from clients.

Dubai's non-oil economy strengthened in September as IHS Markit Dubai Purchasing Managers' Index (PMI) rose for the first time in four months, at 52.6.

The index's reading was at 51.7 in August. However, the latest figure was still among the lowest recorded over the past three years, signalling a relatively modest improvement in business conditions at non-oil companies.

The index is derived from individual diffusion indices which measure changes in output, new orders, employment, suppliers' delivery times and stocks of purchased goods. The survey covers the Dubai non-oil private sector economy, with additional sector data published for travel and tourism, wholesale and retail, and construction.

New order growth at Dubai firms softened over the course of September, to indicate the fourth successive monthly slowdown in demand, while sales increased at a solid pace overall as a number of panelists mentioned that strong competition once again limited new orders from clients.

The survey results found that output volumes increased at a slower rate than those seen earlier in the year. That said, the pace of expansion was faster than in August, in part due to some firms boosting their marketing activity. Attention was also directed at reducing outstanding business, which fell for the first time since January 2016. The overall contraction was only marginal though.

David Owen, economist at IHS Markit, said Dubai PMI remained relatively subdued in September, despite rising from the three-and-a-half year low in August.

"Sales growth slowed further as companies faced tough market competition, leading to another reduction in output prices. Activity growth did improve, but was still weaker than observed in the first seven months of the year," he said.

"The slowdown led to a further weakening in the level of sentiment towards the one-year business outlook. That said, most firms are still optimistic that price discounting will encourage greater sales in the future, while continuing to mention the positive impact that the Expo 2020 is likely to have on the local economy," Owen added.

waheedabbas@khaleejtimes.com