Hiring in Dubai’s private sector remains stagnant despite business growth

Staffing fell in tourism and recreation as well as construction, but rose in wholesale and retail

Total business activity in Dubai’s non-oil private sector stayed strong in June led by growth in the construction sector, the monthly economy tracker by Emirates NBD found.

However, rising output failed to generate higher employment, with staffing broadly unchanged since May as companies again remained cautious with regard to new hiring.

Staffing fell in tourism and recreation as well as construction, but rose in wholesale and retail.

“This continued the weak overall trend in the labour market seen over the past year-and-a-half,” the report said. The employment index has trended at 50 since February 2018.

Meanwhile the overall seasonally adjusted Dubai economy tracker index stood at 58.4 in June, compared to May’s 52-month high of 58.5.

“The elevated level of the headline figure reflected further marked increases in total activity and new business, in contrast to a neutral contribution from employment,” the report stated.

Among the three key sectors monitored, the strongest overall performance was again registered in wholesale and retail (59.9), although growth slowed for the first time in 2019. The headline figure for tourism and recreation also eased since May (58.9), but to a smaller degree.

Construction posted its best overall performance since last November (57).

Khatija Haque, head of MENA Research at Emirates NBD, said: “There was little change in the June survey relative to May, but the data for Q2 2019 points to a sharp acceleration in Dubai’s economy in the second quarter of this year, with the average DET index reading at the highest level since Q1 2015.

“However, this growth in the volume of output has been on the back of continued price discounting and as a result is not translating into more jobs or higher salaries in the private sector.”

The rate of growth in business activity accelerated for the fifth time in the first six months of 2019, to the strongest since the series began in 2010. All three sectors monitored posted robust increases in activity, with the fastest overall expansion seen in travel and tourism.

Increase in new business was also noted in June, although the rate of expansion eased from May’s recent peak.

Input price inflation slowed for the fourth month running to the weakest in the current 15-month sequence of inflation. Meanwhile, prices charged for goods and services fell for the 14th month running, although at the slowest rate since February. All three key sectors continued to engage in price discounting in June.

Looking ahead, expectations for business activity over the next 12 months were also elevated in June, although lower than in April and May. Sales forecasts in the wholesale and retail sector hit a new record high.

“The survey data so far this year supports our view that Dubai’s GDP growth is likely to be faster this year compared with 2017 and 2018,” added Haque.