The index monitoring Dubai’s private sector business performance dipped to 48.9 in February, marking the first time in five years that the index fell below the neutral score of 50.

The index declined 1.8 points from the previous month, signalling a marginal deterioration in the private sector’s overall performance, according to Emirates NBD, which produces the monthly report.

The February reading, according to Khatija Haque, head of Mena research at Emirates NBD, highlights the challenges faced by Dubai’s external-oriented service-based economy. ”Uncertainty about global economic growth, volatility in financial markets, and low oil prices have weighed on sentiment and activity, while tourism and retail trade has also been affected by a strong US dollar,” said Haque.

All three sub-sectors monitored by the index – construction, wholesale & retail, and travel & tourism – registered a decline in business activities linked primarily to weaker market conditions and fewer new orders.

Most of the surveyed companies reported lower new business, with the travel & tourism sector reporting the fastest reduction in new work.

Input prices are also understood to have declined functionally across the emirate’s private sector for the second successive month. Emirates NBD said the prices charged fell at the sharpest rate in the index’s history due to increased competition for new work.