Output, new work fall at record rate

Dubai - Employment conditions worsened again in Dubai at the start of the second quarter.

Notwithstanding a slew of measures taken by Dubai government and free zones, lockdown had a drastic impact on private sector business activity in April with output and new work falling at record pace, leading to job losses, according to PMI survey.
The IHS Markit Dubai Purchasing Managers' Index posted a new survey record low of 41.7 in April, down from 45.5 in March, to indicate a severe deterioration in overall business conditions in the Dubai non-oil private sector.
While the Central Bank of the UAE unveiled a Dh256 billion worth of measures to support the economy during the lockdown, Dubai government has launched an Dh1.5 billion economic stimulus package for the next three months to support companies and the business sector in Dubai by boosting liquidity.
An analyst at Moody's has said central bank's relaxing liquidity buffers would, over the next few months, support banks' liquidity and ease potential funding challenges.
David Owen, economist at IHS Markit, said with strict measures in place throughout April to combat the pandemic, it was "unsurprising to see such dismal PMI data" for Dubai's non-oil private sector economy.
"Restrictions on movement led to a steep fall in new business, particularly in the travel and tourism industry as air travel remained shut down. Construction firms noted that new building work was largely suspended, contributing to an unprecedented fall in activity," said Owen.
"The Covid-19 crisis weighed heavily on the business outlook in April, with many firms warning of a huge financial hit from the lockdown. Firms pinning hopes on Expo 2020 were also much less upbeat with it being moved to next year, partly dashing hopes of a sharp rebound in the autumn," he said.
"The rate of decline was much quicker than the previous record set in March, with 38 per cent of surveyed businesses noting a fall in output during the month. While firms often linked weaker activity to restricted movement and reduced opening hours, the loss of new business was also widely apparent in April," said the survey report.
Sales declined at a steep rate, one that was the fastest seen in over ten years of data collection. With countries in the region, and further afield, initiating public health measures, exports in the emirate also took a drastic hit, said the report.
The downturn was notably broad-based across Dubai's non-oil private sector economy, with all key sectors recording stark decreases in activity and new work. By far the sharpest reduction in activity was seen in the travel & tourism industry amid continued restrictions at home and abroad on international air travel. There was also a substantial decline in construction work as firms placed new building activity on hold during the lockdown period, said the survey report.
- issacjohn@khaleejtimes.com