Dubai non-oil private sector economy reported strong growth momentum in the first quarter of 2017 with the Emirates NBD Dubai Economy Tracker Index (DETI) averaging at 56.7, indicating the fastest rate of growth since the first quarter of 2015.
In March DETI rose to 56.6 from 56.2 in February, on the back of stronger output and new work expansion. Inventories also increased at a faster rate last month.
“The March data is consistent with sharp improvements in business conditions across Dubai’s non-oil private sector economy, with output, new orders and employment all expanding at a faster pace than the previous month.” Tim Fox, Head of Research & Chief Economist at Emirates NBD said.
Employment grew marginally in March, with this index rising to 50.7 from 49.9 in February. Overall, employment growth has been slow in the first quarter of 2017, with this index averaging just 50.6, compared with 53.4 in the first quarter of 2015.
With input costs rising at a slightly faster rate in March (51.8) while output prices continued to decline on average (48.7), business margins remained under pressure. The rate of decline in selling prices last month was similar to February.
Overall, new business increased for the 13th month in succession and the rate of expansion climbed to the sharpest in over two years. Survey respondents linked the increase to generally favourable economic conditions, more construction projects, and successful promotional activities.
Business confidence regarding growth prospects over the coming 12 months remained strongly optimistic in March, but the degree of optimism eased to its weakest in seven months to the lowest level since August 2016 with only 30 per cent of firms expecting output to be higher in 12 months’ time compared with nearly 47 per cent of firms in February.
At the sub-sector level, business confidence improved across construction firms, but moderated elsewhere.
The best performing sub-sector monitored by the survey was wholesale & retail followed by travel & tourism and construction.
The wholesale & retail trade sector index eased slightly from the record high in February, but still indicates a strong rate of growth in the sector at 57.1. Both output and new work indices remained above 60, but were lower than February’s readings. Firms continued to discount selling prices in March. Despite strong growth in output and new orders, employment in the wholesale and retail trade sector declined marginally in March.
Prices in travel and tourism sector continue to rise as the headline travel and tourism index eased to a still-solid 55.3 in March from 57 in February. Firms in this sector increased selling prices (53.7) on average in March, marking the fifth straight month of output price rises. Data showed input costs were contained in March and employment was unchanged.
The construction sector index rose to 54.8 in March from 53.3 in February, signalling a faster rate of growth in this sector last month. New work growth accelerated sharply in March with this index jumping to 59.4 from 55.9 in February. Despite the strong rise in output and new work, employment in the construction sector was broadly unchanged in March. Firms continued to cut selling prices to secure new work, but the extent of price cuts was the weakest since October 2016. Input costs rose slightly in March, further squeezing margins.