March data signalled a sharp improvement in business conditions across Dubai’s private sector economy, with output, new orders, and employment and stocks of purchases all expanding at a faster pace than in the preceding month.

This was highlighted by a rise in the seasonally adjusted Emirates NBD Dubai Economy Tracker Index – a composite indicator designed to give an accurate overview of operating conditions in the non-oil private sector economy –  to 56.6 in March, up from 56.2 in February. Moreover, the latest reading was indicative of the second-sharpest upturn in business conditions for over two years. As a result, the average for the first quarter (56.7) was the sharpest since the first quarter (Q1) of 2015.

The best performing sub-sector monitored by the survey was wholesale & retail (index at 57.1), followed by travel & tourism (55.3) and construction (54.8).

A reading of below 50.0 indicates that the non-oil private sector economy is generally declining; above 50.0, that it is generally expanding. A reading of 50.0 signals no change.

The survey covers the Dubai non-oil private sector economy, with additional sector data published for travel & tourism, wholesale & retail and construction.

Tim Fox, head of Research & Chief Economist at Emirates NBD, said: “The March data is consistent with sharp improvements in business conditions across Dubai’s non-oil private sector economy, with output, new orders and employment all expanding at a faster pace than the previous month.”

Key findings

March data highlights that Dubai’s private sector gained momentum
Sharpest rise in new orders in 25 months
Renewed increase in employment

Business activity and employment

A robust and accelerated expansion of business activity was at the heart of the latest upturn in operating conditions. Furthermore, the overall pace of output growth in March accelerated from February’s three month low. Anecdotal evidence cited improved underlying demand conditions, alongside successful promotional strategies and more ongoing projects.

Latest data indicated a renewed increase in overall employment. However, the pace of jobs growth was relatively subdued.

Incoming new work and business activity expectations
New business increased for the thirteenth month in succession. Furthermore, the rate of expansion climbed to the sharpest in over two years. Survey respondents linked the increase to generally favourable economic conditions, more construction projects, and successful promotional activities.

Business confidence regarding growth prospects over the coming 12 months remained strongly optimistic in March, but the degree of optimism eased to its weakest in seven months, despite increasing output. At the sub-sector level, business confidence improved across construction firms, but moderated elsewhere.

Input costs and average prices charged

Input price inflation remained modest across the private sector in March. All the three monitored sub-sectors noted a rise in input costs, led by wholesale & retail.

However, output charges fell again, with the rate of decline little-changed from the prior month and marginal overall. There were divergent trends recorded across the key sub-sectors; travel & tourism companies raised their average selling prices, while construction and wholesale & retail firms reduced output charges. Discounts were generally offered in order to attract customers amid reports of intense competition. – TradeArabia News Service