Job creation picks up pace in Dubai’s private sector

Dubai: Dubai’s non-oil private sector continued to create more jobs last with renewed efforts to increase employment numbers, according to the IHS Markit Dubai Purchasing Managers’ Index for June 2021.

Data for June showed that the rate of job creation was the quickest since November 2019, but slower than the long run series average.

Overall, last month, output growth in Dubai’s non-oil economy slipped, as a weaker rise in sales and supply shortages curtailed the sector’s recovery.

Input cost inflation accelerated as firms saw a mark-up in commodity prices, pushing output charges higher for only the second time in three years.

The Dubai PMI fell for a second successive month from 51.6 in May to 51 in June. The latest reading indicated only a slight improvement in operating conditions in the non-oil private sector, and one that was slower than the average seen since data collection began in January 2010.

“Business activity in the Dubai non-oil sector was hindered by weaker sales growth and raw material shortages in June, with the rate of growth slowing to a seven-month low. Both the Construction and Travel & Tourism sectors saw a reduction in sales, with restrictions on travel often mentioned as a drag on the economic recovery,” said David Owen, Economist at IHS Markit.

Rise in output

Both output and new orders rose to a lesser degree than in May. According to panelists, there was a general improvement in economic conditions as the impact of COVID-19 eased. However, this was countered by a slowdown in sales growth and reports from some firms that raw material shortages and price hikes had curbed work on new projects.

Business activity continued to rise across the Construction and Wholesale & Retail sectors, but in both cases, the upturn slowed from the preceding month. Travel & Tourism activity saw a renewed upturn after a slight decline in May.

New work across Dubai’s non-oil private sector rose only slightly at the end of the second quarter. While some respondents saw an increase in demand as markets reopened, others found that competitive pressures hindered order book volumes. Flight cancellations were meanwhile linked to a quicker fall in sales in the Travel &Tourism industry.

Business optimism

Businesses were more optimistic regarding future output growth in June. The degree of optimism for the next 12 months was the second strongest since last September.

Issues with the supply of raw materials placed further pressure on input prices. With input costs rising, non-oil firms marked up their output charges for only the second time in 38 months. With competition increasing, some companies reduced their selling prices to attract new customers, weighing on the overall rise.