DUBAI: Dubai’s non-oil sector returned to growth in December, but the expansion was modest as employment fell and sentiment for the new year was subdued, a survey showed on Monday.

The seasonally adjusted IHS Markit Dubai Purchasing Managers’ Index (PMI) rose to 51 in December from 49 in November, rising above the 50-mark that separates growth from contraction for the first time since September.

“An increase in output and new orders led to a renewed improvement in the health of the Dubai non-oil sector in December,” said David Owen, economist at IHS Markit.

“At 51.0, however, the index signalled only a slight expansion in Dubai’s economy, as falling employment, lower stocks of purchases and shorter delivery times all acted as drags on the headline reading,” he said.

The Middle East tourism and business hub has been hit hard by the coronavirus crisis, with the emirate’s economy estimated to contract by 6.2% in 2020.

This year, Dubai expects the economy to grow 4%, partly because it will host the Expo 2020 world fair, a six-month event originally scheduled to begin in October, but postponed for a year because of the COVID-19 pandemic.

Firms reported a sharp rise in business activity in December driven by increased sales and price discounts, with expansion seen across sectors such as retail and wholesale, travel and tourism, as well as construction.

Anecdotal evidence, however, indicated some respondents were sceptical about an economic recovery in the near term as the pandemic continues to impact business turnover, the survey compilers said.

“Looking ahead, firms continued to present a highly subdued outlook for business activity in December, despite some confidence that the confirmed effectiveness of COVID-19 vaccines should help a global economic recovery in 2021,” Owen said.