World Economy

Dubai Private Sector Growth at New Low

Dubai Private Sector Growth at New LowDubai Private Sector Growth at New Low

Dubai’s private sector economy registered a slower expansion of business activity in October, with the rate of growth edging down to the slowest rate since February 2010, a report said.

According to sub-sector data, weaker growth was partly driven by a slight fall in business activity at travel and tourism companies, while both construction and, wholesale and retail sub-sectors registered slower increases in activity in October, explained the  Dubai Economy Tracker released by Emirates National Bank of Dubai, TradeArabia reported.

Sponsored by Emirates NBD and produced by Markit, the survey provides an early indication of operating conditions in Dubai. The survey covers the Dubai non-oil private sector economy, with additional sector data published for travel & tourism, wholesale & retail and construction.

Though robust overall, growth in new orders followed a similar trend to activity, the report said. With output and new orders both expanding at or close to multi-year lows, private sector firms raised their staff numbers at the weakest rate in nearly four years in October.

Companies meanwhile signaled a sustained squeeze on operating margins, with input prices rising moderately while prices charged declined, although marginally.

Khatija Haque, head of Mena Research at Emirates NBD, said: “Activity growth in Dubai slowed sharply in October, with the travel & tourism sector showing an outright contraction in output and employment.”

“However, we expect activity in this sector to recover as we head into the winter high-season. The construction sector survey data is encouraging as it signals relatively robust growth in new orders and output in October, despite heightened concerns about government spending in the face of sustained low oil prices,” she added.

 Key Findings

At 51.4, the seasonally adjusted Emirates NBD Dubai Business Activity Index remained above the neutral 50.0 value in October to signal a further rise in private sector business activity.

However, the reading was down from 56.0 in September and pointed to the weakest rate of expansion since February 2010. Looking at the three key sub-sectors, the pace of activity growth moderated across both construction and wholesale & retail companies, while travel & tourism firms saw a slight fall in activity.

In line with the trend for activity, employment growth slowed in October, with private sector companies registering the weakest increase in staff numbers in the current 46-month sequence of job creation.

October data signaled a sustained upturn in new work placed at Dubai private sector companies. Although robust overall, the rate of growth was the second-slowest seen since December 2010, with all three key sub-sectors noting weaker expansions in new orders.