Dubai private sector growth shows upward momentum

Dubai / Emirates Business

Dubai private sector companies indicated a sustained recovery in growth momentum from the survey-record low experienced in February. At 52.7 in April, up slightly from 52.5 in March, the seasonally adjusted Emirates NBD Dubai Economy Tracker Index highlighted the fastest improvement in overall business conditions since November 2015.
The headline index has now posted above the crucial 50.0 no-change value for two months in a row, but the latest reading was still weaker than the long-run survey average (55.1). All three key sub-sectors monitored by the survey recorded an improvement in business conditions during April, led by wholesale & retail.
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 the Dubai Economy Tracker in April is encouraging, particularly as it reflects faster new orders and output growth. The latest survey confirms our view that Dubai’s economy is growing in 2016, albeit at a slower rate than last year.”

Business activity and
employment
A robust and accelerated expansion of business activity underpinned the latest upturn in operating conditions across the Dubai private sector. Moreover, the overall pace of output growth in April was the steepest since September 2015. A number of firms commented on stronger underlying client demand, alongside successful marketing and promotional strategies.
Despite a rebound in business activity, latest data signalled that job creation was relatively subdued across the private sector. The main exception was a solid rebound in employment growth among construction companies to its fastest for five months.

Incoming new work and
business activity
expectations
Incoming new work increased again among private sector companies in April and, moreover, the upturn in new business was the fastest since November 2015. Survey respondents noted that improved domestic market conditions, reduced uncertainty about the economic outlook and sustained price discounting strategies had all contributed to higher levels of client demand.
Wholesale & retail firms noted the fastest upturn in new business, while solid growth was also recorded in
the construction and travel &
tourism sectors.
Dubai private sector companies are upbeat about their growth prospects for the year ahead. Travel & tourism was the most positive sub-sector monitored by the survey, followed by wholesale & retail. However, latest data indicated that overall business confidence eased since March and remained weaker than the average seen in 2015.

Input costs and average prices charged
April data signalled only a marginal rise in input prices across the private sector. However, this contrasted
with broadly stable cost burdens in March and falling input prices earlier in 2016.
At the same time, average prices charged by Dubai companies dropped for the fourth month running, led by travel & tourism.
This was generally linked to competitive pricing strategies and associated efforts to stimulate spending among clients.