Dubai’s non-oil private sector sees strongest growth in nearly two years

Rising output and new orders led to an improvement in business conditions



Dubai’s non-oil private sector posted strong growth in January driven by rising output and new orders, according to the monthly survey by Emirates NBD.

The seasonally adjusted Emirates NBD Dubai Economy Tracker Index stood at 57.1 at the start of the year, up from 55.9 to signal the fastest rate of improvement in nearly two years.

The latest reading was also stronger than the series average.

All the three key sub-sectors monitored by the survey also recorded marked rates of expansion.

Travel and tourism remained the best performing category in January (index at 57.8), followed by wholesale and retail (57.7) and construction (55.4).

The wholesale and retail sector saw the strongest rate of activity growth in seven months, with some firms attributing the rise to promotional activities to stimulate client demand.

Meanwhile, construction firms widely cited new projects as the principal factor behind the increase in output.

Dubai’s non-oil private sector also registered greater amounts of new work for the eleventh month in succession. The latest increase in new business was also the fastest since March 2015.

Anecdotal evidence suggested that stronger demand combined with promotional activities supported sales, the report stated.

Despite the steep increase in business activity, job creation was “modest”, although the pace of staff hiring picked up slightly since December, it found.

In terms of input costs, inflation eased since December and pointed to a marginal rate of increase.

“Despite sustained cost pressures, private sector companies discounted their output charges for the sixth consecutive month,” the report said.

Firms in the construction and wholesale and retail sectors reported that intense market competition had left them unable to pass on higher cost burdens to clients.

However, travel and tourism companies raised their average selling prices thanks to strong demand.

Khatija Haque, head of MENA Research at Emirates NBD, said: “The rise in the Dubai Economy Tracker index in January to its highest level in nearly two years was mainly due to faster expansion in output and new orders.

“While some of the improvement was attributed to new projects, price discounting is still playing a significant part in supporting demand.”

Looking ahead, private sector companies remained optimistic about their prospects for activity growth over the next year.

Survey respondents commented on new projects and forecasts of improving market conditions.