July 12, 2024

Dubai Non-Oil Economy slumps down reeling under global slowdown despite output being unchanged

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During February, there was a major slump down witnessed in otherwise the powerful, rigid and one of the pivotal parts of Middle Eastern territories’ largest economy UAE due to global slowdown and reeling impact of Coronavirus. However, the productivity and output growth in the emirate remained unchanged despite the economic slowdown.

The IHS Markit Dubai Purchasing Managers’ Index slumped down to a four-year low of 50.1 in February from 50.6 a month before. The reading that indicates above 50 states the economic expansion and below points to a contraction.

The February results signal broadly unchanged business conditions midway through the first quarter of the year, according to the survey.

The headline PMI was held back by weaker sales and lower inventories at Dubai companies, while output rose only modestly last month. The construction sector fared the worst, recording a moderate decline in business conditions, while wholesale and retail registered a slight improvement.

New orders decreased for the first time since February 2016. Few of the panelists noted that the impact of travel restrictions in the wake of the coronavirus outbreak on the travel and tourism sector, which saw the first drop in total new business in 16 months.

David Owen, an economist at IHS Markit stated that“The headline reading of 50.1 signaled that business conditions broadly stagnated, driven by the first monthly fall in new orders in four years. “With the [coronavirus] outbreak appearing to intensify, this poses an additional challenge ahead for Dubai’s economy.”

Companies last month also reduced input purchases slightly in order to streamline stock levels. Vendor delivery times lengthened, with some panelists noting delays on imports sourced from China, according to the survey.

Output prices dropped for the 22nd month during February. The rate of decrease was moderate, however, and the softest since last September. On the positive side, input costs were broadly unchanged from January.

Companies also raised hiring activity following a reduction in staff during January. The overall increase in employment “was mild” though, IHS said. Business sentiment for future output rises was affected by the drop in new business in February. With the global economic slowdown and threats looming from the coronavirus, companies were less optimistic that output will grow over the next 12 months.

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