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Khatija Haque - Head of Research & Chief Economist
Published Date: 09 November 2020
The Dubai PMI declined to 49.9 in October from 51.5 in October, the lowest reading since May. Output and new work increased at a slower rate last month, while firms in the private sector continued to shed jobs. The business expectations component of the survey fell to a series low of 50.6 in October, with weak demand and uncertainty about the continued impact of the Covid-19 pandemic on activity weighing on sentiment.
Source: IHS Markit, Emirates NBD Research
All three sector PMIs declined in October, with only the wholesale & retail sector PMI indicating an expansion in the sector last month, albeit at the slowest rate since May. Output and new order growth in the wholesale and retail trade sector slowed in October, despite further price discounting by firms. Businesses were optimistic about their future output, although the degree of optimism was the weakest since April.
The travel and tourism sector saw output and new orders fall in October despite a further reduction in prices charged as the Covid-19 pandemic has continued to weigh on tourism. IATA reported international passenger air traffic was still down -88.8% y/y in September, even after recovering somewhat over the summer. The acceleration in the spread of Covid-19 across Europe and the UK in October, and the re-imposition of travel restrictions, was likely a major factor in much weaker business expectations in Dubai's travel & tourism sector last month. The UK, Germany, France and Italy accounted for more than 14% of Dubai’s international visitors in 2019. The future output index for the travel & tourism sector fell to 46.4 in October from 58.8 in September, indicating that more firms in the sector expect their output to be lower in a year’s time.
Source: Emirates NBD Research
The construction sector index declined to 48.2 in October from 50.4 in September, as output, new work and employment all fell last month. The business expectations component also moved below the neutral 50-level for the first time in the survey history.