Emirates NBD Dubai Economy Tracker.
September data signalled a sustained upturn in output levels within Dubais private sector economy, helped by growth across all three key sub-categories of activity monitored by the survey.
Overall rates of business activity and new orders growth were, however, softer than those seen on average through the first half of 2015. As a result, private sector companies were more cautious in terms of their staff hiring in September, with the latest expansion of employment numbers the slowest for three-and-a-half years.
Meanwhile, inflationary pressures continued to moderate, with input costs rising at the slowest pace since May and average prices charged were broadly unchanged over the month.
This press release contains the sixth 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 slight slowdown in the pace of expansion in Dubais non-oil economy is consistent with the slowdown across the UAE in September. Overall, the pace of activity remains robust however, particularly in the construction sector. The travel and tourism remains the softest out of the three sectors surveyed, although optimism remains high, and we expect activity to recover as we head into Q4 2015.
Key Findings
Growth of business activity remains faster than Julys 40-month low
Construction output rises sharply, while the travel & tourism sector experiences only modest growth
Job creation sustained in September, but at slowest pace for three-and-a-half years
Business activity and employment
Adjusted for seasonal influences, the Emirates NBD Dubai Business Activity Index posted 56.0 in September, to remain well above the neutral 50.0 threshold. Although the index dipped from 57.6 in August, the latest reading signalled a much faster rate of output expansion than Julys 40-month low.
Of the three key sectors monitored by the survey, construction companies signalled the strongest rise in business activity and the rate of growth accelerated to a four-month high. Wholesale & retail firms also outperformed the all-sector trend in September, with business activity rising at the steepest pace since April. In contrast, latest data indicated only a moderate increase in business activity across the travel & tourism sector.
Emirates NBD Dubai Economy Tracker
Sources: Emirates NBD, Markit
Incoming new work and business activity expectations
Volumes of new work increased at a strong pace in September, with the latest increase only slightly less marked than the five-month high recorded during August. Anecdotal evidence cited rising spending among clients and successful marketing initiatives. In some cases, survey respondents noted that price discounting strategies had been required to attract new work.
Dubai private sector firms are highly optimistic regarding the 12-month business outlook, although the degree of positive sentiment remained slightly weaker than seen on average during the first half of 2015. Travel & tourism companies indicated the most upbeat projections for growth over the year ahead, underpinned by hopes of more supportive economic conditions across the region. Meanwhile, business confidence across the construction sector also exceeded the Dubai whole economy average in September, with some respondents pointing to development work ahead of Expo 2020.
Input costs and average prices charged
Average cost burdens increased at only a modest pace across the Dubai private sector, reflecting relatively subdued raw material price rises and softer salary pressures in September. Moreover, the overall rate of input price inflation eased to its lowest for four months. At the same time, average prices charged by private sector companies were broadly unchanged since August. By sector, rising average prices charged by travel & tourism companies contrasted with continued price discounting by construction firms.
