Dubai's non-oil sector growth eases, with job cuts in construction, travel and tourism - Gulf Business
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Dubai’s non-oil sector growth eases, with job cuts in construction, travel and tourism

Dubai’s non-oil sector growth eases, with job cuts in construction, travel and tourism

The Emirates NBD Dubai economy tracker index fell to its second-lowest reading in over two years in December

Dubai skyline

Growth in Dubai’s non-oil private sector eased in December even as employment slumped, according to the latest market report by Emirates NBD.

The seasonally adjusted Emirates NBD Dubai economy tracker index fell from November’s 55.3 to 53.7 in December – marking the second-lowest reading in over two years and standing below the historic average (since 2010) of 55.2.

The average for the fourth quarter of 2018 (53.8) was also the lowest of any quarter since Q1 2016, the report said.

All three of the key monitored sectors – wholesale and retail, construction, and travel and tourism – also registered slower improvements in business conditions in December.

Travel and tourism continued to post the weakest overall growth (52), followed by construction (53.7) and wholesale and retail (54.2).

According to the report employment was little-changed during the month, following a fractional rise in staffing levels during November and declines in both September and October.

Jobs also contracted in the construction and travel and tourism sectors, it stated.

Although output rose for the 34th consecutive month in December, the rate of growth eased since November to the third-weakest in 2018. Construction continued to record the sharpest pace of expansion.

Inflows of new business also continued to rise in December, but at a slower pace. With the exception of October 2018, growth was the weakest since October 2016.

Rates of expansion slowed in all three major sectors monitored, most notably in construction.

Khatija Haque, head of MENA Research at Emirates NBD, said: “All three of the individual sectors tracked in the index expanded at a slower pace in December as compared to November, with the construction sector slowing from the particularly strong 57.5 seen last month to 53.7 in the latest print. Travel and tourism remained the underperformer, falling from 52.8 to 52.

“Output in the whole of Dubai survey remained solidly expansionary, with over a quarter of respondents seeing greater activity, while nearly a third of firms saw greater new orders, in a positive for future output.”

Meanwhile average input prices in the non-oil private sector rose only modestly in December, with the rate of inflation at a four-month low and below the long-run series average.

A relatively strong increase in travel and tourism contrasted with a fall in input costs in the wholesale and retail sector.

With a subdued rise in costs, private sector companies cut their charges for goods and services for the eighth month running in December. The rate of reduction slowed compared with November, however.

“The squeeze on firms’ margins was less than seen in November as input costs grew at the slowest pace since August, while price discounting also slowed,” said Haque.

“Only 6.4 per cent of firms reported price cutting, compared to 16.9 per cengt the previous month. Nevertheless, headcount remained flat, with less than 1 per cent reporting increased employment.

“December’s index reading takes the 2018 average to 55 – moderately weaker than the 56 averaged in 2017 but nevertheless a more robust reading than seen in 2015 and 2016. Our real GDP growth estimate for the year is 2.8 per cent, in line with that recorded in 2017,” she added.

Looking ahead, the survey found that the 12-month outlook for business activity dipped to a five-month low in December. However, the majority expected future conditions to improve, with only 5.3 per cent expecting a deterioration over the next 12 months.


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