Dubai: Recovery under threat as business conditions sour, recent gains reversed
By Abeer Abu Omar
Business conditions in Dubai dropped to the lowest levels since May amid a spike in coronavirus cases that threatens the city’s economic recovery.
Non-oil private sector activity in the Middle East’s business hub slowed from levels seen during the third quarter of the year, according to IHS Markit. Its Purchasing Managers’ Index dipped to 49.9 last month from 51.5 in September, falling below the 50 mark that separates contraction from growth.
“After a robust quarter of growth for the Dubai non-oil economy, October data pointed to a more subdued picture as overall business conditions were left broadly stable,” said David Owen, economist at IHS Markit. “Businesses also showed weaker optimism towards the economic recovery from Covid-19, amid reports of weak demand and uncertainty about the future impact of the pandemic on activity and jobs.
— Businesses reported the weakest increase in activity in five months, partially because of a softer upturn in new work
— Sentiment for the coming year’s business outlook was the weakest on record — firms still saw an increase in future activity, but optimism was only fractional
— The pace of job losses quickened compared to September as companies looked to cut costs, but it was still slower than during the lockdown
— Output in sectors including travel and tourism, construction continued to fall
— There were more delays in customs and shortages of some inputs, which led to longer delivery times
Business conditions in the United Arab Emirates, of which Dubai is a part, took a hit in October as new business dropped for the first time since May amid continuing job losses. Lingering fears over the persistence of the pandemic are weighing on future activity. Cases in the Gulf nation have gained momentum over the past month while the economy has been gradually reopening.