According to a new survey released on Monday, Dubai's non-oil private sector expanded at a solid pace, and employment growth picked up to a 20-month high in July.

The IHS Markit Dubai Purchasing Managers' Index (PMI), which covers sectors such as travel and tourism, wholesale and retail and construction, rose from 51.0 in June to 53.2 in July. The upturn was the second-quickest since November 2019 and only slightly weaker than April's recent peak.

The survey results showed that non-oil firms often cited additions to sales teams in response to rising customer footfall. In addition, there was a renewed increase in employment among wholesale and retail companies, while growth accelerated in the travel and tourism and construction sectors.

The index was driven by a much faster rise in output levels at the start of the third quarter. Sector data showed that travel and tourism firms saw the most marked improvement in output growth since June, with wholesale and retail and construction also recording faster expansions.

"Growth in the Dubai non-oil economy re-accelerated in July, helped by a rise in customer numbers that boosted sales in the travel and tourism and wholesale and retail sectors. This was also a key driver of employment as firms frequently mentioned hiring sales staff, leading to the fastest rate of job creation since November 2019," said David Owen, Economist at IHS Markit.

"Businesses will be hoping to build on the economic recovery throughout the rest of the year. At 53.2 in July, the headline PMI was at its second-highest in 20 months, to offer further reassurance that the economy is heading in the right direction," said Owen.

The survey results showed that companies often pointed to a rise in demand and improving economic conditions after the impact of Covid-19.

"New order volumes rose at the quickest pace in three months, whilst also exceeding growth rates seen throughout the 16 months prior to April. Firms signalled increasing pressure on capacity during July, as levels of outstanding work rose to the greatest extent for more than two years," it said.

The overall rate of inflation was modest. Whilst some firms raised their output charges in response to higher costs, a greater number lowered their charges. Survey respondents typically cited discounts for clients to stimulate sales.

The degree of positivity towards future activity rose to a three-month high.

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