Dubai's non-oil private sector growth eases in December
Dubai - The key monitored sectors - construction, wholesale & retail and travel & tourism - registered slower improvements in business conditions in December.
Published: Wed 16 Jan 2019, 7:30 AM
Last updated: Wed 16 Jan 2019, 10:54 PM
Non-oil private sector growth in Dubai eased in December as the three main sectors expanded at a slower pace compared to November, Emirates NBD said on Tuesday.
Dubai's largest bank said in a report that although total activity continued to rise at a strong overall pace, new business increased at the second-slowest rate in over two years and employment remained broadly unchanged. "Inflationary pressures remained weak as input costs rose modestly and firms continued to cut their charges."
The bank's Dubai Economy Tracker Index fell from November's 55.3 to 53.7 in December - the second-lowest reading in over two years and below the historic average (since 2010) of 55.2.
The report said this signalled relatively muted non-oil growth. Moreover, the average for the fourth quarter of 2018 (53.8) was the lowest of any quarter since first quarter 2016.
Khatija Haque, head of Mena Research at Emirates NBD, said all three of the individual sectors tracked in the index expanded at a slower pace in December as compared to November, with the construction sector slowing from the particularly strong 57.5 seen last month to 53.7 in the latest print. Travel & tourism remained the underperformer, falling from 52.8 to 52.0, compared to wholesale & retail trade's 54.2. "Output in the whole of Dubai survey remained solidly expansionary, with over a quarter of respondents seeing greater activity, while nearly a third of firms saw greater new orders, in a positive for future output. The majority also expected future conditions to improve, with only 5.3 per cent expecting a deterioration over the next 12 months," said Haque.
All three of the key monitored sectors - construction, wholesale & retail and travel & tourism - registered slower improvements in business conditions in December. Travel & tourism continued to post the weakest overall growth (52.0), followed by construction (53.7) and wholesale & retail (54.2).
Haque said the squeeze on firms' margins was less than seen in November as input costs grew at the slowest pace since August, while price discounting also slowed. Only 6.4 per cent of firms reported price cutting, compared to 16.9 per cent the previous month. Nevertheless, headcount remained flat, with less than one per cent reporting increased employment.
"December's index reading takes the 2018 average to 55.0 - moderately weaker than the 56.0 averaged in 2017 but nevertheless a more robust reading than seen in 2015 and 2016. Our real GDP growth estimate for 2018 is 2.8 per cent, in line with that recorded in 2017," she said.
Minister of Economy Sultan bin Saeed Al Mansouri forecast that the UAE GDP would grow more than three per cent in 2019 after recording between 2.5 per cent and three per cent growth in 2018.
The outlook for the UAE economy is brighter than for the rest of the GCC according to an IMF report that estimates that the six-nation bloc's GDP is expected to increase by 1.9 per cent in 2018 and 2.6 per cent in 2019, overcoming a dip of 0.2 per cent in 2017.
Emirates NBD Economy Tracker's December data suggested improving productivity in Dubai as, although output rose strongly, employment was little-changed. This followed a fractional rise in staffing levels during November and declines in both September and October. Moreover, jobs contracted in the latest month in the construction and travel & tourism sectors.
While inflows of new business continued to rise in December, but at a slower pace, rates of expansion slowed in all three major sectors monitored, most notably in construction.
Meanwhile, the 12-month outlook for business activity dipped to a five-month low in December but remained relatively strong, the bank said. - firstname.lastname@example.org