Dubai businesses remain upbeat in July

dubai - Non-oil private sector firms witnessed stronger new orders and output growth

Dubai business conditions improved at the fastest pace in July since March 2015, according to the Emirates NBD Dubai Economy Tracker.

The data shows that Dubai's private sector companies signalled a positive start to the third quarter of 2016.

The headline seasonally adjusted Emirates NBD Dubai Economy Tracker Index increased from 54.6 in June to 55.9 in July.

The index - a composite indicator designed to give an accurate overview of operating conditions in the non-oil private sector economy - has signalled a recovery in operating conditions in each month since the series hit record low seen in February.

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

The best performing sub-sector monitored by the survey was wholesale and retail (index at 57.3 in July), followed by travel and tourism (55.1) and construction (53.5). In each case, the latest readings were above the crucial 50.0 no-change value.

"The improvement in the Dubai Economy Tracker index in July is consistent with the rise in the whole UAE Purchasing Managers Index last month, and is underpinned by stronger new work and output growth. The wholesale and retail sector, in particular, probably benefitted from holiday spending over Eid," Khatija Haque, head of Mena research at Emirates NBD, 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 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.

Business activity, employment
Higher levels of business activity have now been recorded for five consecutive months, following the moderate decline seen in February. Moreover, the latest expansion of private sector output was the fastest since February 2015.

While wholesale and retail companies recorded the strongest upturn in business activity, the acceleration in growth since June was driven by steeper rises in the construction and travel and tourism sectors.

Greater levels of business activity translated into a moderate expansion of private sector employment in July. The latest increase in payroll numbers was the joint fastest since November 2015, led by a rebound in job hiring among travel and tourism companies.
 
New orders
Steeper growth of incoming new business was the key factor underpinning the positive performance recorded in July. The latest expansion of new orders received by private sector firms was the fastest since March 2015.

Survey respondents cited generally favourable business conditions, resilient client demand and competitive pricing strategies. Meanwhile, private sector companies remain confident about the year-ahead business outlook, although the degree of optimism eased since June in all three key sub-sectors.
 
Input costs
July data signalled that input price inflation remained softer than seen on average since the survey began in 2010. Moreover, the latest rise in overall cost burdens was the slowest for three months. At the same time, average charges increased only fractionally, although this contrasted with a sustained period of price discounting earlier in 2016.

The overall rise in average prices charged reflected a robust increase across the travel and tourism sector, while lower prices were reported by construction and wholesale and retail companies in July.

- abdulbasit@khaleejtimes.com