Emirates NBD Dubai Economy Tracker .
Latest business survey data pointed to a robust and accelerated expansion in Dubais private sector output during August. Furthermore, the rate of business activity growth was the fastest seen since May, with all three monitored sub-sectors reporting stronger output growth in the latest survey period. The rebound in activity growth was underpinned by a stronger expansion in new business, which increased at the strongest rate in five months.
Despite stronger growth in activity and new orders, confidence towards the 12-month business outlook moderated for the second month in a row in August, while the rate of job creation was little-changed from July. On the prices front, input cost inflation across Dubais private sector strengthened to a six-month high, but selling prices declined slightly.
This press release contains the fifth release of data collected from a new monthly survey of business conditions in the Dubai non-oil private sector. Sponsored by Emirates NBD and produced by Markit, the survey provides an early indication of operating conditions in Dubai. The survey covers the Dubai non-oil private sector economy, with additional sector data published for travel & tourism, wholesale & retail and construction.
Commenting on the Emirates NBD Dubai Economy Tracker, Tim Fox, Chief Economist at Emirates NBD, said:
The rise in business activity in August is encouraging, and suggests that at least some of the slowdown over the previous two months was due to Ramadan. Business optimism about future growth remains high, but has moderated since the Q2, with the sharp decline in oil prices since June likely weighing on sentiment. Year-to-date, the Dubai Economy Tracker suggests that the pace of growth in Dubai has been robust, although somewhat slower than in 2014, with the output index averaging 59.1 in January through August, compared with 62.1 over the same period last year.
Key Findings
Business activity growth rebounds from Julys 40-month low
All three key sub-sectors report faster expansions of output
Confidence towards the business outlook edges down in August
Business activity and employment
The seasonally adjusted Emirates NBD Dubai Business Activity Index registered at 57.6 in August, up from Julys recent low of 53.1, and above the neutral 50.0 value for the sixty-seventh month in a row. Moreover, the latest reading pointed to the fastest expansion of output since May. Stronger increases in output were recorded across all three key sub-sectors in August. The steepest rate of growth was seen at construction companies, followed by wholesale & retail firms, with rates of expansion quickening to three-month highs in both cases. While output growth also quickened across travel & tourism sector, the rate of increase was only modest overall.
August data pointed to a sustained and strong upturn in Dubai private sector employment. The rate of growth was up only slightly from the previous month, however, and was slower than Junes recent peak.
Emirates NBD Dubai Economy Tracker
Sources: Emirates NBD, Markit
Incoming new work and business activity expectations
Dubai private sector businesses saw a further increase in total new business during August, with the rate of expansion improving since Julys recent low to a five-month high. Panel reports suggested that improved market conditions and a general upturn in client demand had boosted new work intakes over the month, while some firms commented that the use of promotional discounts had helped them to secure new business.
Latest survey data indicated that Dubai private sector firms remained optimistic towards the 12-month business outlook in August. That said, the degree of positive sentiment moderated further from Junes recent high to its lowest level in three months.
Input costs and average prices charged
Private sector companies operating in Dubai continued to discount their selling prices in August. Though only moderate, the rate of reduction was one of the fastest seen in the current seven-month sequence of decline. Some firms commented that increased market competition had led them to discount their charges. In contrast, average input costs continued to increase across Dubais private sector economy in August, indicating a further squeeze on operating margins. Furthermore, the rate of cost inflation was the fastest since February and solid overall.
Emirates NBD Dubai Economy Tracker: Sector summary
Sources: Emirates NBD, Markit
