Dubai’s non-oil private sector grew at the slowest pace in December since October 2017, according to the latest Emirates NBD Dubai Economy Tracker Index – a composite indicator designed to give an accurate overview of operating conditions.

 The seasonally adjusted Index eased to 54.7 in December, from 55.3 in November. The latest reading indicated the slowest rate of improvement for 14 months.

By sector, wholesale & retail (index at 54.9) was the best performing category, closely followed by construction (index at 53.5). The travel & tourism sector (51.2) experienced the slowest improvement in business conditions.

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.

Khatija Haque, head of Mena Research at Emirates NBD, said: “The decline in the Dubai Economy Tracker index in December is a little surprising, but appears to be broad-based across all the key sectors.  Nevertheless, a reading of 54.7 still indicates economic growth in December. Looking at 2017 as a whole, the survey data suggests that Dubai’s economy grew at a faster rate than both 2015 and 2016.”  

Key findings

•    Dubai Economy Tracker Index eases to 54.7 in December, from 55.3
•    Growth in business activity and new work remains sharp overall
•    Elevated output charge inflation in wholesale & retail and construction sectors

Business activity and employment

Non-oil private sector companies operating in Dubai reported the slowest growth in business activity since April 2016. Nonetheless, the rate of expansion remained sharp overall in December. At the sector level, construction companies noted the steepest increase in output growth during the latest survey period.

Job creation in the non-oil private sector continued for the tenth month running during November. The rate of hiring eased, however, and was the weakest reported since June. According to anecdotal evidence, firms increased payroll numbers in order to meet rising output requirements.

Incoming new work and business activity expectations

Continuing the sequence seen since March 2016, volumes of new orders increased during December. That said, the rate of growth softened to a seven-month low amid reports of easing domestic demand.

Business activity expectations remained strongly positive overall during December’s survey. The degree of confidence improved since November and registered above the series’ long-run average. According to anecdotal evidence, an expected economic upturn alongside incoming new projects underpinned confidence among non-oil private sector firms in Dubai.

Input costs and average prices charged

Average cost burdens continued to increase during December, thereby extending the current sequence of rising operating costs to 22 months. That said, the rate of input price inflation softened to a three-month low and registered below the historical average. Construction sector firms reported the most marked increase in input prices.

Selling prices in Dubai’s non-oil private sector rose during December, thereby ending a three-month sequence of price discounting. Moreover, the rate of output charge inflation in the construction and wholesale & retail sectors reached the highest since these series began in March 2015.

The Emirates NBD Dubai Economy Tracker, produced by IHS Markit, a leader in critical information and analytics is based on data compiled from monthly replies to questionnaires sent to senior executives in approximately 600 private sector companies. – TradeArabia News Service