Dubai non-oil private sector growth remains sluggish in February

DUBAI: Dubai's non-oil private sector recorded its third straight month of expansion in February, but growth remained sluggish due to a downturn in the travel and tourism sector, a survey showed on Tuesday.

The seasonally adjusted IHS Markit Dubai Purchasing Managers' Index (PMI) rose to 50.9 in February from 50.6 in January.

The pace of growth - marginally above the 50 mark that separates expansion from contraction - was well below the series average of 54.6.

The sector expanded in only six months of 2020 as the coronavirus pandemic pummelled the economy of the Middle East's tourism and commerce hub.

"New business inflows dropped for the first time since last May in February, suggesting that renewed restrictions on services have stymied the economic recovery from the pandemic," said David Owen, economist at survey compiler IHS Markit.

"The overall fall in sales was only mild though and has so far not deterred firms from increasing output and employment."

The output subindex rose to 53.4 in February from 52.6 the month before.

Firms linked the activity expansion to ongoing projects, new customers and improving economic conditions since the pandemic's initial impact.

Output grew in the wholesale and retail and construction sectors, but declined in the travel and tourism sector. IHS has separate tracker indices for the three sectors.

Sales volumes fell for the first time since May 2020 in February as Dubai imposed increased coronavirus-related restrictions. Employment grew, but only marginally.

Business sentiment for the next 12 months was the highest since September, as firms were optimistic that the UAE's vaccine rollout could lead to a rebound in output later in the year.

"However, the near-term outlook could be choppy as cases remain high and other parts of the world continue to restrict activity and travel," Owen said.