Business & Money | Sunday 13 December, 2015 9:33 am |

November data highlighted a modest rebound in business conditions across the Dubai private sector, with output, new orders and employment all expanding at a faster pace than in the previous month. 

As a result, 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 - picked up from 51.9 in October to 53.4 in November. 

The latest reading was comfortably above the neutral 50.0 value, but signalled a slower pace of improvement than the average since the series began in 2010 (55.3). Stronger output growth was a key factor boosting the headline index in November.

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.

 

Commenting on the Emirates NBD Dubai Economy Tracker, Khatija Haque, Head of MENA Research at Emirates NBD, said:

 

“The improvement in operating conditions in Dubai in November, as reflected in the rise in the Dubai Economy Tracker Index, is encouraging.  Activity in the travel and tourism sector has improved as we head into the ‘high season’ for hospitality, and we expect this trend to continue into Q1 2016.  The strong growth in output and new work in the construction sector supports our view that investment in infrastructure will continue to contribute to growth in Dubai’s economy, despite sharply lower oil prices.”

 

Key Findings

• Private sector output growth accelerates from the 68-month low recorded in October
• Construction remains the best performing sub-sector, followed by Wholesale & Retail 
• Travel & tourism returns to growth and experiences a recovery in job creation

Business activity and employment

Dubai’s private sector output growth rebounded from the 68-month low recorded in October. Of the three key sub-sectors monitored by the survey, construction experienced the fastest rise in business activity, followed by wholesale & retail. Although travel & tourism companies indicated only a moderate rise in business activity, this represented a change of direction after the slight decline seen in October. Higher levels of business activity encouraged firms to boost their payroll numbers in November. The overall rate of employment growth reached a three-month high, led by a robust pace of hiring among construction companies.

 

 Emirates NBD Dubai Economy Tracker Index™
Seasonally adjusted, 50 = no-change

 

Incoming new work and business activity expectations

New business levels continued to rise in November, which survey respondents linked to a generally supportive economic backdrop and, in some cases, efforts to stimulate demand through price discounting. However, the rate of new order growth remained below the long-run series average. Some firms suggested that subdued consumer sentiment and competitive market conditions had held back new business growth at their units.  

 

Business confidence regarding the year-ahead outlook remained positive in November, but the degree of optimism slipped to its lowest since this index began in early-2012. While survey respondents commented on expectations that market conditions will improve over the next 12 months, in particular helped by projects related to Expo 2020, some also suggested that softer global economic conditions could act as a drag on growth momentum.

 

Input costs and average prices charged

Average cost burdens increased only slightly at Dubai private sector companies in November, with the rate of inflation the lowest for six months. Meanwhile, selling prices were reduced for the tenth month running, partly driven by discounting strategies across the travel & tourism and wholesale & retail sectors during the latest survey period.