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Dubai PMI softens in August

Khatija Haque - Head of Research & Chief Economist
Published Date: 10 September 2020

 

Dubai’s headline PMI declined to 50.9 in August from 51.7 in July, signaling a slower rate of expansion in the non-oil private sector last month relative to July.  While business activity and new work rose in August, the rate of growth slowed despite further price discounting by firms.  Selling prices in August declined at the fastest rate since October 2019 as firms noted that customer demand “remained subdued in general”.  Against this backdrop, firms again reduced employment in August, in a further effort to contain costs.  Panellists were optimistic on average about their output in a year’s time, although the degree of optimism was the lowest since June.

Dubai PMI components

Source: IHS Markit, Emirates NBD Research

Wholesale & retail trade

The wholesale and retail trade sector index fell to 52.9 in August, the lowest level since June.  Firms in the sector reduced prices at the fastest rate since November last year, in a bid to encourage consumer footfall, despite another increase in input costs last month.  Jobs in the sector declined slightly in August, although the rate of job loss was the slowest since February. 

Wholesale & retail trade sector index

Source: IHS Markit, Emirates NBD Research

Travel & tourism

The travel & tourism sector index was unchanged at 48.3 in August, even as business activity declined slightly.  New work remained in contraction territory but the rate of decline was the slowest since February.  Businesses in the sector continued to offer generous discounts and promotions to boost demand in August.  While firms remained optimistic on average that their output would be higher in a year’s time, the degree of optimism was weaker than in July. 

An independent research consultancy, ForwardKeys, noted that flight bookings from London to Dubai for Q4 2020 are down -74.1% y/y as a result of the coronavirus pandemic and associated travel restrictions. The UK was the third largest source market for Dubai’s international visitors last year.

Construction sector

The construction sector index declined to 51.7 in August from 53.0 in July, as output and new work growth slowed m/m.  As a result, more firms reported reduced headcount last month.  Firms lowered selling prices again in August but at a slower rate than in July. Business optimism was the weakest since April.