Emirates NBD Dubai Economy Tracker: Business conditions continue to improve at a robust pace in July
Robust growth momentum of the non-oil private sector in Dubai was maintained in July, with 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 – at 56.3 in July, broadly similar to 56.5 in June.
The latest index reading was one that was above the long-run trend (55.2).
By sector, the wholesale & retail industry (index at 57.9) was once again the best performing category, followed by travel & tourism (56.3) and the construction sector (54.8).
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:
“While the headline index continues to reflect strong growth in the non-oil economy in July, firms’ margins continue to be squeezed as they lower selling prices, particularly in the trade and hospitality sectors. Employment growth remains soft overall.”
- Dubai Economy Tracker Index records 56.3 in July
- Sharp expansions of output and new orders
- Another marginal increase in employment
- Business activity and employment
The positive overall trend for business conditions was supported by a sharp increase in output, despite growth easing to a slightly slower pace. The rise in business activity was attributed by panellists to favourable economic conditions and more projects.
In spite of a steep expansion in business activity, the pace of job creation was only marginal, continuing the trend observed in the past five months of expansion. Notably, all three monitored sub-sectors raised their staffing levels, led by wholesale & retail.
Incoming new work and business activity expectations
Incoming new business expanded at the fastest pace since April. The rate of increase was stronger than the long-run series trend. According to anecdotal evidence, client wins were supplemented by promotional activities and stronger underlying demand conditions.
Business confidence increased from June’s 10-month low, but remained weaker than the overall level of positive sentiment recorded on average in the series history. Optimism was firmly rooted in expectations of further improvements in demand, supported by promotional activities.
Input costs and average prices charged
Input prices rose for the seventeenth successive month. The rate of inflation eased from June’s three-month high, however, and was only marginal. The travel & tourism sector was the only sector to buck the overall upward trend seen in the construction and wholesale & retail sectors. Stronger demand reportedly led to a general increase in raw material prices, according to anecdotal evidence.
Despite higher costs, firms reduced output charges for the second month in succession. The rate of discounts offered slowed to a fractional pace. Price discounting was associated with efforts to stimulate demand amid intense competitive conditions. The reductions in output charges in the travel & tourism and wholesale & retail sectors outweighed the increase seen in the construction sector.