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SPIKE IN NEW WORK

Dubai saw the fastest rise in new work
since March 2015.

Dubai private sector growth hits 10-month high

DUBAI, July 11, 2016

Dubai’s private sector recorded a sustained recovery in growth momentum in June, picking up to its highest level since August 2015 led by improving business conditions in the travel & tourism and wholesale & retail sectors, a report said.

At 54.6, up slightly from 54.5 in May, the headline 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 - has now registered above the crucial 50.0 no-change threshold for four consecutive months.

The rise in the index since May was largely driven by a sharp and accelerated expansion of incoming new work.

Wholesale & retail was the best performing sub-sector monitored by the survey in June (headline index at 58.2), followed by travel & tourism (54.1). Meanwhile, the latest survey pointed to only a modest upturn in construction sector business conditions (51.5).

The 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 improvement in the Dubai Economy Tracker index in June is underpinned by strong growth in new orders and output.  The recovery in the travel and tourism sector last month is particularly encouraging as this sector had been relatively soft in previous months.  However, we note that the expansion has not led to increased employment, suggesting that firms are becoming more efficient in their operations.”

Key findings

•    Faster growth in travel & tourism and wholesale & retail help offset construction sector slowdown
•    New business volumes rise at strongest pace for over a year
•    Private sector job creation stagnates in June, but business confidence dips only slightly

Business activity and employment

Private sector business activity continued to expand at a robust pace in June, with the rate of growth unchanged from May’s 14-month high. Stronger growth in wholesale & retail activity, alongside an accelerated rise in travel & tourism, helped to offset a weaker expansion of construction output.

Survey respondents noted that improving client spending patterns and competitive pricing strategies had led to rising business activity in June.

Despite a sustained upturn in private sector output, staffing levels were broadly unchanged in June. This contrasted with rising employment numbers during the past four-and-a-half years. Some firms noted that uncertainty about the economic outlook had led to more cautious hiring strategies.

Incoming new work and business activity expectations

New business volumes increased for the fourth month running in June. Moreover, the latest rise was the fastest since March 2015, which survey respondents partly linked to greater consumer spending. Reflecting this, travel & tourism and wholesale & retail were the best performing sectors in terms of new business growth in June. Looking ahead, private sector firms in Dubai remain optimistic about their prospects for growth over the next 12 months. However, the degree of confidence eased slightly since May and remained below the long-run survey average.

Input costs and average prices charged

Input price inflation remained moderate during June, with only the travel & tourism sector recording a faster rise in average cost burdens than in the previous month. At the same time, average prices charged by Dubai private sector companies were broadly unchanged overall in June. While some firms sought to pass on higher costs to clients, there were also reports citing continued price discounting in order to stimulate new sales. – TradeArabia News Service




Tags: tourism | travel | Emirates NBD | Dubai private sector |

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