Wednesday, June 19, 2019 11:34 AM

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Dubai’s private sector maintains sharp growth

Dubai’s non-oil private sector showed strong improvement in business conditions, according to UAE Purchasing Managers’ Index (PMI), a composite indicator designed to give an accurate overview of operating conditions in the non-oil private sector economy.

The survey covers the Dubai non-oil private sector economy, with additional sector data published for travel and tourism, wholesale and retail and construction.

“February data signalled a further strong improvement in business conditions across Dubai’s non-oil private sector. Greater overall business activity remained a key driver of growth momentum, whilst an uptick in new work was also registered. The seasonally adjusted Emirates NBD Dubai Economy Tracker Index was at 55.8 in February, little-changed from 56.0 in January. Improvements in operating conditions have now been recorded in every month for the past two years,” a report said.

The best performing sub-sector monitored by the survey was the wholesale and retail sector (57.3), closely followed by the travel and tourism sector (57.2) and the construction sector (53.9). 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.

Khatija Haque, Head of MENA Research at Emirates NBD, said: “The PMI survey data for February continued to show solid growth in Dubai’s economy, with the travel and tourism sector performing particularly well after a relatively soft Q4 2017. Overall we expect Dubai’s economy to grow at a slightly faster rate this year, underpinned by infrastructure investment and government spending.”                                                                        

A strong and robust expansion in business activity was a key factor behind the latest improvement in operating conditions in Dubai’s non-oil private sector. The rate of growth was sharp overall, despite softening fractionally since the preceding survey.

Following moderate job creation at the beginning of 2018, no-change was reported in employment levels during February. The finding thereby ended an eleven-month streak of rising payroll numbers. Job shedding was registered in the travel and tourism and construction sectors, whilst growth was seen among wholesale and retail firms.

“Inflows of new business accelerated at the fastest pace since August last year during the latest survey. Furthermore, the rate of growth was sharp overall, with the steepest rise in new work seen in the travel & tourism sector. Many firms noted strong demand from both domestic and foreign sources,” the report says.

Optimism towards future growth prospects remained strongly positive, despite softening since January. New project wins and an expected economic upturn underpinned business confidence during February, according to anecdotal evidence.

Non-oil private sector firms operating in Dubai reported easing input cost inflation during February. Nonetheless, the pace of inflation remained marked overall and was led by the wholesale & retail sector. Rising average cost burdens have now been registered for 24 months in a row.

Output charge inflation softened during the latest survey period. The rate of inflation was only slight overall, albeit above the series’ long-run average. The finding thereby extended the current sequence of rising selling prices to three months.

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

Emirates NBD is a leading banking Group in the region. As at 31st December 2017, total assets were Dh470.4 billion, (US$128 billion). The Group has a significant retail banking franchise in the UAE and is a key participant in the global digital banking industry, with over 90 per cent of all financial transactions and requests conducted outside of its branches. The bank was declared the Most Innovative Financial Services Organization of the Year at the 2017 BAI Global Innovation Awards.