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December business conditions improve in Dubai but little job growth

December business conditions improve in Dubai but little job growth

Emirates NBD noted a jump in construction activity and sentiment during the month but relatively little job growth

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Business conditions in Dubai’s private sector economy showed signs of improvement in December but job creation remained subdued, according to local bank Emirates NBD’s Economy Tracker Index.

The index increased from 55.2 in November to 55.9 in December, its highest reading since July, on the back of faster rates of output and new order growth.

Emirates NBD noted that it was the 10th month the index has posted above the 50.0 market that indicates growth.

During December, travel and tourism was the best performing sub-category at 56.9, followed by wholesale and retail at 56.4.

However, there was a noticeable shift in construction activity with the index increasing from 51.8 to 54.3.

“The rebound in construction sector activity in December is particularly encouraging after relatively sluggish performance for most of H2 2016. We expect construction will be a key driver of growth in Dubai in 2017 as preparations for Expo 2020 move up a gear,” said Khatija Haque, head of MENA research at Emirates NBD.

In terms of job creation, all three sectors recorded “relatively subdued” rates of employment growth.

This was despite construction firms seeing their fastest rise in staffing levels since May due to greater workloads.

New work expanded at its fastest rate since early 2015 during the month with strong contributions from the travel and tourism and wholesale and retail industries.

Furthermore, Emirates NBD said private sector firms in Dubai remained upbeat about the year ahead with the highest degree of positive sentiment since June 2015.

Average cost burdens showed a modest increase during the month and the rate of inflation was the highest in seven months, while strong competition for new work continued to squeeze operating margins.

This was reflected in prices charged by private sector companies, which decreased for the fifth month running.

Only travel and tourism bucked the overall trend with averages prices charged rising moderately at the end of 2016, according to the bank.

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