Dubai business activity stays upbeat in June

dubai - Travel and tourism and wholesale and retail were the best-performing sectors in terms of new business growth

Private sector business activity in Dubai continued to regain growth momentum in June led by improving business conditions in the travel, tourism, wholesale and retail sectors, a new survey reveals.

New business volumes increased for the fourth month running in June. The latest rise was the fastest since March 2015, which survey respondents partly linked to greater consumer spending.

"Reflecting this, travel and tourism and wholesale and retail were the best-performing sectors in terms of new business growth in June. Looking ahead, private sector firms in Dubai remain optimistic about their prospects for growth over the next 12 months. However, the degree of confidence eased slightly since May and remained below the long-run survey average," Emirates NBD Dubai Economy Tracker survey shows.

The headline seasonally adjusted Emirates NBD Dubai Economy Tracker Index picked up to its highest level since August 2015 at 54.6, up slightly from 54.5 in May.

The index - a composite indicator designed to give an accurate overview of operating conditions in the non-oil private sector economy - has now registered above the crucial 50.0 no-change threshold for four consecutive months.

According to the Emirates NBD report, the rise in the index since May was largely driven by a sharp and accelerated expansion of incoming new work.

"Wholesale and retail was the best performing sub-sector monitored by the survey in June [headline index at 58.2], followed by travel and tourism [54.1]. Meanwhile, the latest survey pointed to only a modest upturn in construction sector business conditions [51.5]," the survey report said.

The headline Emirates NBD Dubai Economy Tracker Index is derived from individual diffusion indices, which measure changes in output, new orders, employment, suppliers' delivery times and stocks of purchased goods.

A reading of below 50.0 indicates that the non-oil private sector economy is generally declining; above 50.0, that it is generally expanding. A reading of 50.0 signals no change.

Khatija Haque, head of Mena research at Emirates NBD, said the improvement in the Dubai Economy Tracker index in June is underpinned by strong growth in new orders and output.

"The recovery in the travel and tourism sector last month is particularly encouraging as this sector had been relatively soft in previous months. However, we note that the expansion has not led to increased employment, suggesting that firms are becoming more efficient in their operations."

The survey found that faster growth in travel and tourism and wholesale and retail helped offset construction sector slowdown. However, private sector job creation stagnated in June, while business confidence dipped only slightly.

Private sector business activity continued to expand at a robust pace in June, with the rate of growth unchanged from May's 14-month high.
Emirates NBD survey respondents noted that improving client spending patterns and competitive pricing strategies had led to rising business activity in June.

"Despite a sustained upturn in private sector output, staffing levels were broadly unchanged in June. This contrasted with rising employment numbers during the past four-and-a-half years. Some firms noted that uncertainty about the economic outlook had led to more cautious hiring strategies," it said.

- issacjohn@khaleejtimes.com