Sunday 21 April 2019

Business activity growth was the sharpest seen in
three months.

Dubai non-oil private sector growth ticks up in August

DUBAI, September 10, 2018

Dubai’s non-oil private sector witnessed a flat growth last month compared with July, with both the travel & tourism and construction sectors recording softer growth, said Emirates NBD in its latest Dubai Economy Tracker.

While the wholesale and retail trade index was fractionally higher, overall inflows of new business increased at the slowest pace since April, the report said.

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 – was at 55.2 in August, up from 54.9 in July. The figure remained above the neutral 50.0 mark, thereby indicating an improvement in business conditions. The headline index was in line with historical average.

At the sector level, wholesale & retail was the strongest performer at 56.5 in August, followed by construction (55.3) and travel & tourism (52.9).

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.

Commenting on the Emirates NBD Dubai Economy Tracker, Khatija Haque, head of Mena Research at Emirates NBD, said: “The headline Dubai Economy Tracker Index (DET) increased marginally in August to 55.2 from 54.9 in July.  Output rose at a faster rate than in July, driven by ongoing projects, but new order growth slowed modestly last month.  The employment index eased to 50.4 in August, only slightly above the ‘no change’ level.  The vast majority of firms surveyed (94 per cent) reported no change in staffing levels in August.”

“Producer price pressures eased in August, with the input cost index falling to just 51.0 from nearly 54 in July.  However, average selling prices declined a fraction with some firms citing promotional activity.  The selling price index has been in contraction territory for the last four months running, highlighting the lack of pricing power of firms and the competitive market environment.

“The average DET year to date is 55.6, only slightly lower than the same period last year (56.5).  This suggests to us that Dubai’s economy is probably growing a similar rate to 2017, or a touch slower.  Preliminary estimates from the Dubai Statistics Centre put last year’s GDP growth at 2.8 per cent; about half a percentage point slower than our forecast for 2018,” she added.

Key findings

•    Business activity growth ticks up
•    New business improves at slowest pace in four months
•    Input cost inflation softens

Business activity and employment

Continuing the sequence of expansion recorded since March 2016, business activity increased once again in Dubai’s non-oil private sector. The rate of growth was above the historical average and the sharpest seen in three months. Some firms linked improving output to ongoing projects.

Job creation softened since July and was only fractional overall. Nonetheless, the increase extended the current sequence of expansion to five months. Firms that reported higher payroll figures linked the rise to higher output requirements.

Incoming new work and business activity expectations

Private sector companies in Dubai reported a slower improvement in new work during August. That said, the rate of growth remained marked overall, with many firms linking growth to promotional activity and marketing campaigns.

Business activity expectations ticked up in the latest survey. In fact, the degree of optimism among the strongest seen in the past six-and-a-half years. According to anecdotal evidence, Expo 2020 is expected to stimulate growth across the private sector economy.

Input costs and average prices charged

Average cost burdens faced by private sector companies in Dubai increased for the fifth month running in August. The rate of inflation eased since July, however, and was only marginal overall.

Promotional activity led to lower average selling prices in August. The rate of price discounting softened from July, however. – TradeArabia News Service

Tags: Dubai | Emirates NBD | Private sector | non-oil |

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