By Bernd Debusmann Jr
A majority of businesses report being optimistic about prospects in 2020
Growth in Dubai’s non-oil economy weakened in December amid the slowest rise in new orders for almost four years, according to the HIS Markit Dubai Purchasing Managers’ Index (PMI).
According to the PMI, employment increased marginally throughout the month, while business activity remained strong as companies prepared for expected investments and higher sales in 2020.
The report added that firms highlighted that softer economic conditions reduced clients’ spending power, although the rate of increase of business activity quickened from November.
Additionally, firms raised purchasing activity at the sharpest rate in four months, with some reporting that they had sought to grow inventory levels.
Output growth was found to have accelerated most sharply among firms involved in the construction and travel and tourism sectors.
Conversely, the wholesale and retail sector recorded the weakest expansion in output since February 2016.
In response to softening demand growth, many local firms extended price discounting strategies at the end of 2019, with the data signalling a fall in average charges.
Input costs, however, increased for the second month running in December, with a faster rate of inflation from November as a result of a rise in staffing costs. Higher prices for equipment were also reported.
Looking forward, 64 percent of respondents expect business activity to grow, and reported hopes that the market would stabilise and local investment would increase as Expo 2020 approaches.