Dubai private sector optimism falls to record low

Dubai: Optimism in Dubai’s non-oil private sector fell to a record low in November, according to the latest Emirates NBD Dubai Economy even though data in the report reflected moderate growth.

Dubai’s private sector bounced back to 53.4 in November from October’s 68-month record low of 51.9 with output, new orders and employment expanding at a quicker pace than in a month earlier. A reading of above 50.0 generally means the non-oil private sector is expanding, while below 50.0 indicates its in decline.

But even with data showing a modest rebound, “the degree of optimism slipped to its lowest since the index began in early 2012.” The data is compiled from a monthly survey of business conditions in Dubai’s non-oil private sector, produced by Markit and sponsored by Emirates NBD.

Still, Khatifa Haque, Head of Mena (Middle East and North Africa) Research at Emirates NBD, stated in November’s report that the data “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 [first quarter] 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,” she said.

Construction sector

The travel and tourism sector rebounded to positive growth in November after showing signs it was declining in October. The data suggests the sector is once again hiring. Overall, higher levels of business activity encourage non-oil private sector firms in Dubai to boost their employee count in November. The construction sector remained the best performing sub-sector, followed by wholesale and retail.

New business levels grew, however, at a lower rate than a long-run series average. Restrained consumer sentiment and competitive market conditions is holding back new business growth, according to some surveyed firms.

Business confidence for the year ahead “remained positive” but some suggested that softer global economic conditions may drag on growth.

On October 8, a HSBC report found a negative outlook over the near term after recording a 19 point drop in trade confident in the UAE.