Dubai business conditions improve in May

dubai - Construction companies experienced the fastest improvement in business conditions

Private sector business conditions in Dubai recorded robust improvement in May with output and new orders expanding, but the growth momentum eased to a seven-month low.

Emirates NBD's Economy Tracker Index, which tracks business confidence across the non-oil economy, dropped to 55.0 for the month of May, down from a two-year high of 57.7 in April.

The latest reading signalled the slowest pace of improvement observed in seven months, but was comfortably above the neutral 50.0 threshold and was in line with the long-run series average (55.1).

Sub-sector data indicated that construction companies experienced the fastest improvement in business conditions (index at 56.2), followed by wholesale and retail (55.5) and travel and tourism (54.2).

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.

The survey covers the Dubai non-oil private sector economy, with additional sector data published for travel and tourism, wholesale and retail and construction.

Khatija Haque, head of Mena research at Emirates NBD, said the decline in the Dubai Economy Tracker index in May is consistent with the regional country surveys. "However, the data still points to a robust expansion in the non-oil private sector last month. The construction sector survey is particularly encouraging with the sector index near the highest level in one-and-a-half years."

Improving operations reflected another robust upturn in output across the Dubai private sector economy in May.

"Although the overall pace of activity growth slowed to the weakest in seven months, it remained sharp. Reports from panellists indicated that more projects, especially in the construction sector, had bolstered business activity in May," the report said.

Private sector companies continued to raise their payroll numbers, but only at a marginal pace.

Private sector companies operating in Dubai observed a further rise in new business during May. The rate of growth eased slightly from the preceding month, and was the slowest since October 2016. Anecdotal evidence suggested that promotional activities supplemented the increase in market demand.

Dubai private sector companies are optimistic about their growth prospects for the year ahead. The degree of positive sentiment accelerated to a three-month high, driven by improved optimism across all three monitored key sectors, said the report.

New initiatives and innovative sectors being opened up as part of economic diversification and the Expo 2020 continue to provide vast opportunities for businesses and investors in Dubai, according to Omar Bushahab, CEO of business registration and licensing in Dubai Economy.

The number of new businesses that launched in Dubai during the first quarter of the year increased by 126.5 per cent to 308 year on year, according to figures from Dubai Economy.

"Dubai Economy has taken giant strides in enhancing ease of business and competitiveness as part of our strategic objective of enabling sustainable growth and positioning Dubai as the preferred investment destination," he added.

According to the International Monetary Fund (IMF), Dubai's gross domestic product would likely accelerate this year at a faster pace than most Arab economies, bolstered by local spending and a pick-up in global trade.

Gross domestic product will grow as fast as four per cent from 2.7 per cent in 2016, according to Jihad Azour, head of the IMF's Middle East and Central Asia department. The projected growth compares with an average of 2.3 per cent for the Middle East and North Africa, according to IMF data.

- issacjohn@khaleejtimes.com