IN THE MONTH OF JUNE
For the first time since March 2020, the private sector activity recorded improvements in June. This has been due to ease in restrictions that had been initially imposed due to the COVID-19 pandemic. Though there has been a tentative rise in work orders, a reduced workforce is being done due to the pandemic. According to the latest Purchasing Manager Index (PMI) issued by the research firm-IHS, Markit, “Confidence about the business outlook continued to improve, reaching the highest since March.”
Hopeful signs with June scores
David Owen, an economist with the IHS Markit, has stated, “The latest survey data offered hopeful signs for the Dubai non-oil private sector.”
The IHS Markit numbers show the immediate beneficiaries to be the construction sector, wholesale, and retail sectors for the first time since March as they have shown significant “activity growth.” These sectors have benefitted from the ease of restrictions, while the travel and tourism industry did not show a positive note.
Another significant point that cannot be missed is that though more orders keep coming in, severely hit firm had laid off staff due to the pressure to lower costs. Since March, the drop in employment has been sharp and broadly in line with the average. This led to a record low in April, thereby showing that the business expectations were much weaker than before the onset of the COVID-19 pandemic.
Owen reaffirmed, “Firms direly need a boost to cash flow, as many have been left struggling with low revenues and high-cost burdens in June.”
Comparatively, June’s 50 scores showed significant improvement on May’s 46 reading. A score below 50 signifies an economy and business activity in contraction mode.