Employment levels drop in Dubai’s private sector, travel and tourism most hit

Employment levels in Dubai’s non-oil private sector dropped in September for the first time since March, according to the latest monthly survey by Emirates NBD.

The seasonally adjusted Emirates NBD Dubai economy tracker index found that the biggest impact was felt in the travel and tourism sector.

Employment levels also fell at the fastest pace since the survey began in January 2010. Some firms linked job shedding to cost cutting.

However, the rate of contraction was “only slight”, the report stated.

Also read: UAE private sector firms continued to cut jobs in September – survey

Overall, growth in Dubai’s private sector ended the third quarter on a weaker footing, with the latest expansion being the slowest since April.

The contraction in employment and softer output growth led to the weaker growth, the report said.

The index fell to 54.4 in September, down from 55.2 in August. The latest figure was below the historical average.

At the sector level, travel and tourism was once again the weakest performing category at 51.3 in September, followed by construction (53.8) and wholesale & retail (55.5) respectively.

Khatija Haque, head of MENA Research at Emirates NBD, said: “The headline Dubai Economy Tracker Index (DET) declined to 54.4 in September signalling the slowest rate of expansion since April. Both output and new work increased in September but at a slightly slower rate than in August.

“The sector surveys showed continued softness in the travel and tourism sector in September, with this sector index falling to the lowest level year-to-date. Momentum in the wholesale and retail and construction sectors also moderated last month.”

Output across Dubai’s non-oil private sector increased during September, although the rate of growth eased since August. Activity increased to the greatest extent in the wholesale and retail sector.

Inflows of new work increased once again in the latest survey period, continuing the sequence of growth recorded since March 2016. But the rate of growth eased to a five-month low during September.

Average cost burdens continued to rise in September, stretching the current phase of input price inflation to six months.

Meanwhile selling prices fell amid intense competitive pressures and promotional activity.

“Selling prices in Dubai’s private sector declined for the fifth consecutive month, despite a modest rise in input costs. This suggests that firms increased promotional activity and discounts in order to boost demand,” said Haque.

“Stocks of pre-production inventories also rose at the slowest rate since July 2016, indicating less willingness on the part of firms to hold inventories.”

However, the survey found that business confidence across the non-oil private sector remained “strongly positive” during September.

“Firms remain highly optimistic about future output however, with many citing Expo 2020 projects and marketing initiatives as reasons for expected higher output in one year’s time,” added Haque.