Dubai’s non-oil private sector has signaled marginal growth for the second consecutive month in January, as the fast pace rollout of the COVID-19 vaccine and increase in employment rate improved the business outlook of the emirate.
The seasonally adjusted IHS Markit Dubai Purchasing Managers’ Index (PMI) fell to 50.6 in January from 51.0 in December but continued to be growth side for the second consecutive month. A reading above 50 marks indicates economic expansion.
Last year, the economic sector of Dubai expanded in only six months as it was disrupted by the coronavirus pandemic. The firms surveyed expressed greater confidence towards the future business climate in Dubai, linked to the rapid domestic rollout of COVID-19 vaccines.
“Despite sales growth near-stalling, non-oil companies in Dubai increased output for the second month in a row in January. With confidence for 2021 also improving due to the rapid vaccine roll-out in the UAE, employment rose for the first time in nearly a year, after the pandemic drove record declines during the second quarter of 2020.”
The reduction was driven by slight falls in the output and new orders sub-indices, although both remained in expansion above the expansion mark. The output sub-index, which measures business activity fell to 52.6 in January from 54.7 at the end of 2020.
Among the three sectors tracked by IHS Markit, travel and tourism were the only one to contract in January. Wholesale and retail became the key driver behind a marginal growth in employment, its first expansion since February 2020 and the construction sector also grew slightly.
The commercial and the tourism hub of the Middle East, has initiated several measures to support businesses and individuals, launching four stimulus packages to mitigate the impact of the pandemic. As per the government’s projections, Dubai’s economy is expected to expand 4 percent in 2021 driven by its effective response to COVID-19.
“Uncertainty surrounding the near-term economic outlook and the prospect of tighter pandemic measures meant that output expectations across Dubai’s non-oil sector remained subdued in January, despite picking up from the end of 2020,” Mr. Owen added.