Dubai business conditions improve for third month

Dubai - The rate of sales growth reached the strongest for 10 months, driven by reports of higher client demand and the starting of new projects as more economic activity resumed

As Dubai's economy sustained a slow recovery from the aftershock of the Covid-19 lockdown, business conditions improved for the third month in a row in September.
In September, business activities and new business rose at faster rates than in August, with demand growth reaching a ten-month high, according to IHS Markit Dubai Purchasing Managers' Index report.
Optimism among businesses on a better year ahead rose by the end of the third quarter, albeit with companies overall giving a relatively subdued outlook for activity. Hopes of further growth were largely linked to a recovery in sales as Covid-19 lockdown restrictions were eased.
David Owen, economist at IHS Markit, said last month's PMI data finalised a third-quarter period of modest economic recovery in Dubai. "The PMI has consistently remained above the 50.0 no-change mark since July, as business activity grew during the easing of Covid-19 restrictions."
On the downside, the PMI has failed to lift off or signal any strong rebounds in output so far, with firms often initiating price cuts in order to drive sales higher, he said. Meanwhile, employment data signalled a cautious outlook as firms often shed workers to manage cost pressures and enable discounting.
"Furthermore, the recent rise in Covid-19 cases across the UAE and the threat of re-imposed restrictions could lead to a further dip in activity later this year. Firms will thus be wary of expanding too much or too quickly," said Owen.
Dubai government's timely stimulus measures and other effective steps taken by the Central Bank of the UAE and other government departments have been quite critical in helping the emirate face the severe headwinds posed by pandemic-related slowdown, said analysts. "The Great Economic Reset Programme launched by Dubai Economy, in partnership with the Mohammed bin Rashid School of Government, is among such initiatives rolled out to reshape the emirate's economy and reset it towards a more agile, sustainable, resilient and inclusive post-pandemic future."
The PMI report said with the demand growth showing steady improvement, the decline in employment slowed to a moderate pace, while business expectations improved slightly. The fall in employment was the weakest in seven months. "Staff cuts continued to stave off any notable rise in cost pressures in September, with input prices up only marginally. Nevertheless, amid a solid drop in selling prices, margins remained under considerable pressure," said the survey report.
The IHS Markit Dubai PMI, derived from indices which measure changes in output, new orders, employment, suppliers' delivery times and stocks of purchased goods,   posted at 51.5 in September, indicating a third successive monthly improvement in the performance of the non-oil private sector. The index rose from 50.9 in August, but remained below that seen in July and markedly down on the series average of 54.7.
The survey data indicated stronger increases in both output and new business across the private sector in September. "Notably, the rate of sales growth reached the strongest for ten months, driven by reports of higher client demand and the starting of new projects as more economic activity resumed," said the report.
In September, the wholesale & retail sector also witnessed a sharp rise in new orders, with growth near-matching that seen in August.
issacjohn@khaleejtimes.com