Job shedding eases in Dubai despite renewed fall in output
Dubai - With Covid-19 cases rising in the UAE and globally, firms were uncertain as to how restrictions may impact new business in the near future.
Published: Mon 14 Dec 2020, 11:23 PM
Business activity in Dubai’s non-oil private sector declined in November, but job shedding eased as the impact of the pandemic appeared to worsen amid increased worries about a slowing economic recovery, latest data showed.
The IHS Markit Dubai Purchasing Managers’ Index (PMI) report said on Monday growth in new work eased to the weakest seen in five months, leading to a solid reduction in output, while, sentiment regarding the next 12 months of activity fell to a new record low.
The PMI survey posted 49.0 in November, the lowest recorded since May, although job shedding eased to the weakest seen in the nine-month downturn.
“A renewed fall in output and slower sales growth were evident across the Dubai non-oil private sector in November, highlighting the possibility of a ‘double-dip’ economic downturn from the pandemic,” said David Owen, an economist at IHS Markit.
With Covid-19 cases rising in the UAE and globally, firms were uncertain as to how restrictions may impact new business in the near future. “However, news about effective vaccines could restore long-term optimism, as firms are likely to place greater hopes of a strong recovery in 2021,” said Owen.
He pointed out that job numbers started stabilising in November, to signal that the impact of cost-cutting efforts on payrolls has started to ease. “However, a possible hit to demand from falling customer numbers or renewed lockdown measures could lead to another setback for employment in the short-term.”
The UAE’s non-oil gross domestic product is expected to grow by 3.6 per cent in 2021, the Central Bank estimates, suggesting the economy will rebound from an expected contraction in 2020.
The apex bank, which has announced total packages worth Dh388 billion to support the economy, said the non-oil economy was projected to contract 4.5 per cent for 2020.
On a sector basis, demand weakness was most prominent in travel & tourism consequent to a reduction in travel as virus cases flared in some key overseas markets.
However, recent new initiatives, including winter tourism promotion drive, are expected give a major fillip to the travel and tourism sector.
With its latest initiative to kick-start the domestic tourism during winter, the UAE has gained a head start to regain its appeal as the most sought-after holiday destination in the region. To encourage local tourism and promote its desert winters, while the UAE has launched.
“The Most Beautiful Winter in the World’” programme. Already, the key hotel markets in the UAE have reached or surpassed 50 per cent occupancy as winter started.
The PMI survey, which covers the Dubai non-oil private sector economy, with additional sector data published for travel & tourism, wholesale & retail and construction, showed that firms in Dubai lowered output for the first time in six months during November, and at a solid pace.
Construction firms also struggled, noting a lack of new projects and having to rely on work started before the pandemic. “Consequently, firms in the Dubai non-oil sector gave an even worse outlook for the year ahead in November.”