Dubai: Dubai Economy Tracker data for September showed continued expansion in Dubai’s private sector output supported by increase in business activity, but the overall rates of business activity and new orders growth were, however, softer than those seen on average through the first half of 2015.
The tracker data from a monthly survey of business conditions in the Dubai’s non-oil private sector, sponsored by Emirates NBD and produced by Markit give an early indication of operating conditions in Dubai.
September data showed private sector companies were more cautious in terms of their staff hiring, with the latest expansion of employment numbers the slowest for three-and-a-half years.
“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. The 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 the fourth quarter of 2015,” said Tim Fox, chief economist at Emirates NBD.
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.
“Input costs eased sharply in September, with the input price index reading at the neutral 50 level last month, the lowest reading since the series began in March.
Nevertheless, competition for new work meant that output prices declined again on average in September, but at a slower pace than August,” said Khatija Haque, Head of Mena Research, Emirates NBD.
Adjusted for seasonal influences, the Emirates NBD Dubai Business Activity Index posted 56 in September, to remain well above the neutral 50 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.
Trend
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 and 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.
Construction output rose to 60.1 last month, up from 58 in August and 53.4 in July. “This supports our view that some of the slowdown over the summer was due to seasonal factors,” said Haque.
Employment growth in the construction sector was also robust, with the index at 55.4. New work and business expectations in the construction sector were higher than August, and also the strongest of the three sectors surveyed.
While output and activity in the tourism & travel sector did increase in September, the rate of expansion was relatively modest. In wholesale and retail trade output and new orders growth both accelerated in September, with the output index reaching the highest level in five months and the new work index the highest since March 2015.
