Dubai’s non-oil private sector economy grew at a slower pace in July amid signs of squeezed margins and only a marginal increase in job creation, according to Emirates NBD.
The bank’s economy tracker scored the non-oil private sector at 56.3 in July from 56.5 in June, although still above the 55.2 long-term trend. A score of below 50 signals a contraction and above 50 economic growth.
By sector, wholesale and retail continued to be the best performing category at 57.9, followed by travel and tourism at 56.3 and construction at 54.8.
“While the headline index continues to reflect strong growth in the non-oil economy in July, firms’ margins continue to be squeezed as they lower selling prices, particularly in the trade and hospitality sectors. Employment growth remains soft overall,” said Khatija Haque, head of MENA Research at Emirates NBD.
During the month, the non-oil private sector saw a sharp increase in output, despite slowing growth, due to favourable economic conditions.
However, job creation was only marginal, continuing a trend seen over the last five months, with hiring led by the wholesale and retail sector.
Firms surveyed as part of the economy tracker said new business expanded at the fastest pace since April, thanks partly to promotions and underlying demand.
Confidence also increased from a 10-month low in June but remained weaker than the average sentiment seen since the tracker began as firms looked to improvements in demand in the future.
Input prices rose for the 17th successive month but the rate of inflation eased from a three-month high in June.
Despite higher costs, output charges reduced for the second month in succession due to discounting to stimulate demand.
Emirates NBD said reductions in output charges in travel and tourism and wholesale and retail outweighed an increase in the construction sector.