World Economy

Dubai Private Sector Growing

Dubai Private Sector GrowingDubai Private Sector Growing

Dubai’s private sector firms continued to experience robust growth in September helped by growth across travel & tourism, wholesale & retail and construction sectors, a report said, according to Trade Arabia.

However, overall rates of business activity and new orders growth were softer than those seen on average through the first half of 2015, pointed out the latest release of Emirates NBD Dubai Economy Tracker. Sponsored by Emirates NBD and produced by Markit, the survey provides an early indication of operating conditions in Dubai.

As a result, private sector companies were more cautious in terms of their staff hiring in September, with the latest expansion of employment numbers the slowest for three-and-a-half years.

Meanwhile, inflationary pressures continued to moderate, with input costs rising at the slowest pace since May and average prices charged were broadly unchanged over the month.

Tim Fox, chief economist at Emirates NBD, said: “The slight slowdown in the pace of expansion in Dubai’s non-oil economy is consistent with the slowdown across the UAE in September. Overall, the pace of activity remains robust however, particularly in the construction sector. Travel and tourism remains the softest out of the three sectors surveyed, although optimism remains high, and we expect activity to recover as we head into Q4 2015.”  

 Business Activity and Employment

Adjusted for seasonal influences, the Emirates NBD Dubai Business Activity Index posted 56.0 in September, to remain well above the neutral 50.0 threshold. Although the index dipped from 57.6 in August, the latest reading signalled a much faster rate of output expansion than July’s 40-month low.

Of the three key sectors monitored by the survey, construction companies signalled the strongest rise in business activity and the rate of growth accelerated to a four-month high. Wholesale & retail firms also outperformed the all-sector trend in September, with business activity rising at the steepest pace since April. In contrast, latest data indicated only a moderate increase in business activity across the travel & tourism sector.

 Incoming New Work And Expectations

Volumes of new work increased at a strong pace in September, with the latest increase only slightly less marked than the five-month high recorded during August. Anecdotal evidence cited rising spending among clients and successful marketing initiatives. In some cases, survey respondents noted that price discounting strategies had been required to attract new work.

Dubai private sector firms are highly optimistic regarding the 12-month business outlook, although the degree of positive sentiment remained slightly weaker than seen on average during the first half of 2015.

Travel & tourism companies indicated the most upbeat projections for growth over the year ahead, underpinned by hopes of more supportive economic conditions across the region. Meanwhile, business confidence across the construction sector also exceeded the Dubai whole economy average in September, with some respondents pointing to development work ahead of Expo 2020.

Average cost burdens increased at only a modest pace across the Dubai private sector, reflecting relatively subdued raw material price rises and softer salary pressures in September. Moreover, the overall rate of input price inflation eased to its lowest for four months.

At the same time, average prices charged by private sector companies were broadly unchanged since August. By sector, rising average prices charged by travel & tourism companies contrasted with continued price discounting by construction firms, the report said.