Business conditions in the UAE fell to an eight-year low in August as competitive pressures bit, according to a new report.

IHS Markit’s Purchasing Managers’ Index dropped to 51.6 from 55 a year earlier and 55.1 in July, edging close to the threshold of 50 that separates contraction from growth.

Heightened market competition continued to weigh on growth, forcing companies to cut prices by the most since April, according to panelists surveyed in the monthly release.

Activity in the non-oil economy increased “at a notably softer rate” compared to July, with weaker demand curbing the expansion, the report said. Even so, customer spending remained strong in the second-largest Gulf economy.

Hiring also eased, with employment numbers largely stagnant within the non-oil sector. Earlier this year, an employment index compiled by Emirates NBD dropped to record lows as companies tried to keep their payrolls tight amid falling selling prices.

“The dip in activity growth dampened business sentiment in August, although the underlying forecast was still strong,” IHS Markit economist David Owen wrote.

But with the World Expo coming to Dubai in 2020, “many businesses were positive that the market will see strong levels of activity in the coming year.”