Growth rate in Dubai’s non-oil private sector eases to 31-month low - Gulf Business
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Growth rate in Dubai’s non-oil private sector eases to 31-month low

Growth rate in Dubai’s non-oil private sector eases to 31-month low

Slower improvements in activity and new work, as well as another contraction in employment led to the slowdown

Dubai’s non-oil private sector continued to post growth in October, although the rate of improvement weakened to a 31-month low, according to Emirates NBD’s monthly survey.

The seasonally adjusted Emirates NBD Dubai Economy Tracker Index stood at 52.5 last month, down from 54.4 in September, and the weakest figure since March 2016.

Slower improvements in activity and new work, as well as another contraction in employment contributed to the slowdown, the report said.

Contrary to the general trend, the construction sector saw a stronger expansion in the latest survey.

Travel and tourism was the weakest performing sector in October at 49.6, followed by wholesale and retail (53.7) and construction (55.5).

Output across the non-oil private sector increased at the slowest rate since December 2017. The expansion was below the historical average, with the travel and tourism sector posting the weakest improvement.

Meanwhile a “modest fall” in employment was noted, with the rate of contraction matching the pace recorded in the preceding survey. Some firms cited cost cutting as a reason behind job shedding, the report said. Job cuts were most evident in the travel and tourism sector, with the construction sector seeing a “modest level of job creation”.

While businesses reported an increase in incoming new work during October, the expansion was the weakest in two-and-a-half years and was well below the historical average amid reports of slowing client demand growth. New order growth was the slowest since April 2016.

Average cost burdens in Dubai’s non-oil private sector increased for the seventh month running in October.

The rate of inflation also accelerated to a three-month high, the report said.

Output charges fell once again in the latest survey, with some firms linking lower selling prices to promotional activity.

Khatija Haque, head of MENA Research at Emirates NBD, said: “While still in expansion territory, the headline index points to the slowest rate of growth in the private sector in more than two and half years. The employment index remained in contraction territory for the second month in a row, as more firms reported a decline in headcount than those reporting an increase. However, the vast majority of firms surveyed reported no change in job numbers in October.

“Margin pressures intensified last month, as input costs rose at a slightly faster rate than in September, while output (selling) prices declined on average. Stocks of inventories also declined last month, the first time this has happened since February 2016,” she said.

However, the survey also found that future growth prospects rose to a record high with firms optimistic about new project wins and developments surrounding Expo 2020.

“Despite the soft survey data, firms in Dubai were the most optimistic than they have been since at least 2012, with nearly 77 per cent of respondents expecting their output to be higher in a year’s time,” added Haque.

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