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Khatija Haque

Dubai private sector slows down in January

DUBAI, February 9, 2016

Dubai’s private sector experienced the slowest overall improvement in business conditions for almost six years in January, according to latest data.

The continued slowdown in the overall performance registered 50.7 on the headline seasonally adjusted Emirates NBD Dubai Economy Tracker Index, down from 51.8 in December 2015.

Although still above the 50.0 no-change mark, the latest reading - a composite indicator designed to give an accurate overview of operating conditions in the non-oil private sector economy - pointed to the weakest overall expansion since February 2010.

By sector, wholesale and retail was the best performing category, with overall business conditions improving at a slightly faster pace than in December. Meanwhile, construction companies experienced a deterioration in operating conditions for the first time since this index began in March 2015.

The headline Emirates NBD Dubai Economy Tracker Index is derived from individual diffusion indices which measure changes in output, new orders, employment, suppliers’ delivery times and stocks of purchased goods.

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 Dubai Economy Tracker survey shows the services sectors continuing to face challenging market conditions at the start of this year, while construction sector activity has also slowed sharply. Weak external demand was evident in the main UAE Purchasing Managers Index survey for January, and this likely weighed particularly heavily on Dubai’s open, export oriented economy. ”

Key findings:

•    Modest increases in private sector output and employment

•    New business volumes rise at slowest pace since February 2010

•    Construction was the weakest performing sub-sector, while wholesale & retail bucked the overall slowdown

Business activity and employment

Private sector business activity increased at a modest pace in January, but the latest rise was the weakest for three months. The wholesale & retail sector bucked the weaker overall trends seen at the start of 2016, with some firms noting a usually large boost to business activity from the Dubai Shopping Festival 2016. Construction firms, however, experienced an outright fall in output levels, which some linked to delays to new projects amid weaker confidence among clients.


Employment levels increased slightly in January, but the rate of job creation remained weaker than the long-run survey average. Some firms suggested that the uncertain economic outlook had weighed on staff recruitment.

Incoming new work and business activity expectations

Total new orders placed at Dubai private sector companies increased only moderately in January, and the rate of expansion eased to the weakest for almost six years. Survey respondents suggested that falling oil prices and global economic uncertainty had led to subdued confidence among clients, in turn acting as a brake on new business growth. Construction companies recorded an outright fall in new work, while only the wholesale & retail sector recorded a faster upturn in incoming new business.

Looking ahead, private sector firms remain positive about the 12-month business outlook, but the degree of confidence was up only slightly from December’s survey-record low. By sector, weaker optimism among construction and travel & tourism firms contrasted with an upturn in growth expectations across the wholesale & retail sector.

Input costs and average prices charged

Average cost burdens decreased for the first time in around five-and-a-half years in January, which firms linked to successful price negotiations with suppliers and weaker demand conditions. Meanwhile, output charges also dropped at the start of 2016. A number of survey respondents noted that strong competition for new work had resulted in promotional discounting.

The Emirates NBD Dubai Economy Tracker, produced by Markit, is based on data compiled from monthly replies to questionnaires sent to senior executives in approximately 600 private sector companies, which have been selected to accurately represent the true structure of the Dubai economy, including manufacturing, services, construction and retail. – TradeArabia News Service




Tags: Emirates NBD | non-oil | Markit | Dubai private sector |

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