Dubai: The Emirates NBD Dubai Economy Tracker Index (DETI), an indicator of operating conditions in the non-oil private sector economy, rose to 57.7 in April from 56.6 in March, signalling the fastest rate of growth since February 2015.
Output and new orders increased very strongly in April, with the indices at 62.6 and 63.2 respectively. April data indicated robust performances across all three key sub-sectors monitored by the survey, led by an accelerated upturn in construction (index at 57.9), closely followed by wholesale & retail (57.8) and travel & tourism (57).
“It is encouraging to see the sharp rise in the construction sector index in April, as this had lagged both wholesale & retail trade and travel & tourism indices in the first quarter. The latest Dubai Economy Tracker survey supports our view that investment in infrastructure ahead of Expo 2020 will be a key driver of Dubai’s growth over the next 2-3 years,” said Khatija Haque, head of Mena Research at Emirates NBD.
The construction sector saw a sharp improvement in business conditions last month, after lagging the other key sectors since the start of the year. The construction sector index rose more than 3 points to 57.9 in April, indicating the fastest rate of growth since March 2015.
Output and new work both rose sharply last month as new projects were awarded and launched. As a result, employment in the construction sector rose at the fastest rate in four months. However, as with the whole of Dubai, the rate of jobs growth is low by historical standards. Price discounting in the sector remains significant, with the output price index easing to 46 in April, even as input cost inflation accelerated.
Wholesale & retail trade index rose to 57.8 in April with output expanding at the fastest rate since the series began in March 2015.
New work also increased at a strong rate, albeit slightly slower than March. Firms were more optimistic in April than they were in March, and stocks of purchases increased at the fastest rate since June 2016, as firms anticipate further improvements in demand.
However, traders’ margins remain under pressure, with output prices declining on average for the last year-and-a-half. Input costs rose in April, but at a slightly slower rate than March.
The travel & tourism sector index rose to 57 in April from 55.3 in March, signalling strong expansion in the sector last month. Output and new order growth accelerated, although firms in the sector reduced selling prices marginally after five months of price rises. Input costs were also slightly lower in April.
The latest upturn in private sector operating conditions was driven by a steep increase in output, led by wholesale & retail and construction. Employment increased across all the three key sectors during April, but at modest rates. New business continued to rise for the fourteenth consecutive month in April.
Average cost burdens increased at a modest pace across Dubai’s private sector in April, with the rate of inflation broadly in line with the trend recorded over the current 14-month sequence of rising prices.
“Overall, the April Dubai Economy Tracker survey data suggests that Dubai’s economy gained momentum at the start of [the second quarter], after a solid [first quarter in] 2017. The accelerated momentum in the construction sector in particular supports our view that infrastructure investment will be a key driver of Dubai’s growth this year, and over the next 2-3 years, as the emirate prepares to host Expo 2020,” Haque said.