Industry, Logistics & Shipping

New orders drive Dubai non-oil sector output in July

Dubai’s non-oil private sector recorded continued improvement during July, stimulated by a further expansion in new orders, while business confidence remained strongly positive, according to the latest Emirates NBD Dubai Economy Tracker.

Dubai’s non-oil private sector recorded continued improvement during July, stimulated by a further expansion in new orders, according to the latest Emirates NBD Dubai Economy Tracker.

However, business conditions in Dubai’s non-oil private sector improved at a slowest rate in three months during July, with growth moderating in each of the three broad sectors surveyed. Business confidence towards future growth prospects remained strongly positive, but also softened to a three-month low.

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 – registered 54.9 in July, down from 56.0 in June. The figure indicated a slower expansion in Dubai’s private sector that was below the long-run average.

At the sector level, construction companies reported the sharpest growth in July (56.9), followed by wholesale & retail (56.3) and travel & tourism (54.5) respectively. However, all three sectors posted softer growth in July relative to June.

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: “While firms reported higher output and new orders in July, this was on the back of extensive price discounting, with average selling prices falling at the sharpest rate since January 2017.  At the same time, input costs continued to rise, further squeezing margins. Against this background, it is unsurprising that employment growth so far this year has been the softest on record.”  

Key findings

•    Output growth eases to three-month low, but remains solid overall
•    Firms continue to stimulate client demand through price discounting
•    Job creation ticks up, led by the construction sector, but remains relatively subdued by historical standards

Business activity and employment    

Business activity increased once again in July, although the rate of expansion eased to a three-month low.  Companies that reported higher output frequently linked the increase to stronger inflows of new business.

Reflecting increased output requirements, firms hired additional staff in Dubai’s private sector. The rate of growth accelerated in July, but remained weak in the context of historical data.

Incoming new work and business activity expectations

Private sector businesses in Dubai reported a sharp improvement in incoming new work during July amid reports of robust domestic client demand and promotional activity. Construction companies reported the strongest expansion in new order books.

Business activity expectations remained strongly optimistic, despite easing to a three-month low in July. Companies pinned hopes on new projects relating to Expo 2020 and successful marketing efforts.

Input costs and average prices charged

Input price inflation across Dubai’s private sector accelerated to a three-month high in the latest survey. The rate of inflation was marked overall, reflecting higher wage and raw material costs.
    
Promotional activity led to the greatest fall in selling prices across the private sector since January 2017. Price discounting has been recorded for three months running. - TradeArabia News Service