Sunday, 24 October, 2021

Dubai’s business growth hits two-year high in Aug

Dubai’s business growth hits two-year high in Aug

DUBAI: Dubai’s non-oil private sector recorded the quickest growth in business activity for nearly two years in August, driven by output growth among travel and tourism and construction companies as the economy continues to recover from the Covid-19 pandemic-induced headwinds.

Dubai’s seasonally adjusted IHS Markit Purchasing Managers’ Index increased to 53.3 in August from 53.2 in July. A reading above 50 indicates economic expansion, while anything below points to a contraction. The index registered a higher reading only once in the past 21 months, in April 2021, a statement said on Thursday, report agencies.

As a result, companies in Dubai, the commercial and trading centre of the Middle East, also increased their employment levels at the fastest rate since November 2019 as they looked to rebuild staff capacity in response to greater sales volumes and backlogs of work.

“The Dubai non-oil economy enjoyed another strong overall improvement in August, driven by a marked rise in output levels that was the fastest seen since September 2019,” David Owen, an economist at IHS Markit, said. “This suggests that the economy is solidifying its recovery from the pandemic, especially as a relaxation of travel measures drove tourism numbers higher and boosted consumer demand.”

Dubai will also stand to gain from the Expo 2020 later this year, which businesses hope will drive spending and growth even higher, Mr Owen added. “With this in mind, firms expanded their staff capacity in August, leading to the sharpest rise in employment since late-2019.”

The pace of Dubai’s recovery has picked up on the back of wide-scale testing and vaccinations.

Key sectors such as tourism and property have made a significant recovery on the back of Dh7.1 billion ($1.93bn) stimulus pumped into the economy since the onset of Covid-19. Dubai’s economy is expected to grow by 4 per cent this year, according to government data.

Business confidence in Dubai has also hit a seven-year high as companies in the emirate expect business conditions to improve before the Expo 2020 world fair begins, according to a July survey by the Dubai Chamber of Commerce and Industry.

“We remain optimistic that private sector business conditions will improve further in Q4 2021 as Expo 2020 gets underway and the recent further easing of travel restrictions boosts visitor numbers during the high season for the travel and tourism sector,” Emirates NBD, Dubai’s largest lender, said on Thursday.

Dubai’s output index jumped to its highest reading since September 2019 to signal a sharp expansion in non-oil output. Companies attributed this to improving new business volumes. However, the overall pace of new order growth eased slightly since the start of the third quarter, IHS Markit data showed.