Tuesday 27 September 2022

Haque... expecting recovery during winter.

Dubai’s private sector growth hits 68-month low

DUBAI, November 9, 2015

Dubai’s private sector economy registered a slower expansion of business activity in October, with the rate of growth edging down to the slowest rate since February 2010, a report said.

According to sub-sector data, weaker growth was partly driven by a slight fall in business activity at travel & tourism companies, while both construction and wholesale & retail sub-sectors registered slower increases in activity in October, explained the  Dubai Economy Tracker released by Emirates NBD.

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.

Though robust overall, growth in new orders followed a similar trend to activity, the report said. With output and new orders both expanding at or close to multi-year lows, private sector firms raised their staff numbers at the weakest rate in nearly four years in October.

Companies meanwhile signalled a sustained squeeze on operating margins, with input prices rising moderately while prices charged declined, although marginally.

Khatija Haque, head of Mena Research at Emirates NBD, said: “Activity growth in Dubai slowed sharply in October, with the travel & tourism sector showing an outright contraction in output and employment.”

“However, we expect activity in this sector to recover as we head into the winter high-season. The construction sector survey data is encouraging as it signals relatively robust growth in new orders and output in October, despite heightened concerns about government spending in the face of sustained low oil prices,” she added.

Key findings

Private sector business activity expands at slowest rate since February 2010

Activity rises at construction and wholesale & retail firms, but declines in travel & tourism

Employment increases at the weakest pace in nearly four years

Business activity and employment

At 51.4, the seasonally adjusted Emirates NBD Dubai Business Activity Index remained above the neutral 50.0 value in October to signal a further rise in private sector business activity.

However, the reading was down from 56.0 in September and pointed to the weakest rate of expansion since February 2010. Looking at the three key sub-sectors, the pace of activity growth moderated across both construction and wholesale & retail companies, while travel & tourism firms saw a slight fall in activity.

In line with the trend for activity, employment growth slowed in October, with private sector companies registering the weakest increase in staff numbers in the current 46-month sequence of job creation.

Incoming new work and business activity expectations

October data signalled a sustained upturn in new work placed at Dubai private sector companies. Although robust overall, the rate of growth was the second-slowest seen since December 2010, with all three key sub-sectors noting weaker expansions in new orders.

Business confidence towards the year-ahead weakened across Dubai’s private sector in October amid reports of relatively subdued global economic conditions. Furthermore the degree of optimism was on par with May’s three-year low, with all three key sub-categories noting reduced sentiment towards future activity growth.

Nonetheless, a number of firms commented that forecasts of improving regional market conditions, alongside new marketing strategies and projects ahead of the Expo 2020, would boost activity.

Input costs and average prices charged

Input costs at Dubai private sector companies rose only modestly over the month. Furthermore, all three monitored sub-sectors saw subdued increases in input prices. Panellists generally commented that increased competition between suppliers had helped to restrict price increases for inputs.

Private sector companies in Dubai meanwhile cut their selling prices for the ninth successive month (albeit marginally) as competition for new work intensified. Out of the three key sub-sectors, both construction and travel & tourism companies cut their output charges in October. – TradeArabia News Service

Tags: Dubai | Emirates NBD | Private sector | Jobs creation |

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