Dubai: business growth momentum eases to seven-month low
May data highlighted a robust improvement in the health of the non-oil private sector, with output and new orders expanding at a sharp rate, though the respective rates of expansion eased since April, according to the Emirates NBD Economy Tracker.
This was highlighted by 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, falling from April’s 26-month high of 57.7 to 55.0 in May. The latest reading signalled the slowest pace of improvement observed in seven months, but was comfortably above the neutral 50.0 threshold and was in line with the long-run series average of 55.1.
Sub-sector data indicated that construction companies experienced the fastest improvement in business conditions (index at 56.2), followed by wholesale & retail (55.5) and travel & tourism (54.2).
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 and tourism, wholesale and retail, and construction.
“The decline in the Dubai Economy Tracker index in May is consistent with what we’ve seen in the regional country surveys. However, the data still points to a robust expansion in the non-oil private sector last month. The construction sector survey is particularly encouraging with the sector index near the highest level in one-and-a-half years,” said Khatija Haque, Head of MENA Research at Emirates NBD.
- Dubai Economy Tracker Index registers at 55.0 in May
span style="font-family: Verdana;">- Sharp rise in output, but growth eases to a seven-month low
span style="font-family: Verdana;">- Slowest rise in new orders observed since October 2016
Improving operations reflected another robust upturn in output across the Dubai private sector economy in May. Although the overall pace of activity growth slowed to the weakest in seven months, it remained sharp. Reports from panellists indicated that more projects, especially in the construction sector, had bolstered business activity in May.
Private sector companies continued to raise their payroll numbers, but only at a marginal pace.
Private sector companies operating in Dubai observed a further rise in new business during May. The rate of growth eased slightly from the preceding month, and was the slowest since October 2016. Anecdotal evidence suggested that promotional activities supplemented the increase in market demand.
Dubai private sector companies are optimistic about their growth prospects for the year ahead. The degree of positive sentiment accelerated to a three-month high, driven by improved optimism across all three monitored key sectors.
Inflationary pressures faced by private sector firms eased to a 14-month low and were only fractional. The increase in input costs in construction and wholesale and retail firms offset a decline reported by travel and tourism firms. Led by construction firms, output charges rose for the first time in 11 months, although at a fractional pace. Firms in the travel and tourism, and wholesale and retail sectors offered discounts to stimulate demand amid reports of intense competition.