Dubai: Private sector activity in Dubai dropped to its lowest point in five months during October, hampering economic recovery from the pandemic strike. More worryingly, the shedding of jobs "quickened" compared to September, says the latest update from IHS Markit.
"Businesses also showed weaker optimism towards economic recovery, amind reports of weak demand and uncertainty about the future impact of the pandemic on activity and jobs," said David Owen, Economist at IHS Markit. "In fact, the overall level of confidence was the weakest in the series’ eight-year history."
Output was particularly hit in the construction and travel and tourism sectors, "mostly due to a lack of new building projects and weak tourist numbers".
"Growth in the wholesale and retail sector was the softest in five months, signalling a broad-based slowdown across some of Dubai’s key sectors," said Owen.
The downbeat sentiments are in sync with mood that private businesses elsewhere in the UAE had to say about short-term prospects.
In Dubai, businesses were again confronted with supply chain enforced delays, something that first showed up immediately after the COVID-19 crisis started to spread in March/April.
"Lead times lengthened at the quickest rate since May," the report notes. "Customs delays and shortages of some inputs were key factors leading to longer delivery times. That said, delays were much weaker than those seen during the Spring."
49.9The Dubai PMI for October, as compared to September's 51.5, which signals an end to the run of growth observed throughout the third quarter of 2020
As uncertainty builds up about the full impact of the pandemic, output expectations dropped to the lowest point on record in October. "Firms still expect a rise in activity in the coming 12 months, but the degree of positivity was only fractional," the report finds.