Dubai's private sector posts softest growth
Dubai - Slower expansion due to dollar, uncertainty about global, regional outlook.
Dubai's private sector recorded the softest growth in 65 months at the end of 2015 with business activity, new orders and employment showing slower growth, latest data released by Emirates NBD revealed.
The headline seasonally adjusted Emirates NBD Dubai Economy Tracker Index posted at 51.8 in December, down from 53.4 in November, and signalled only a modest improvement in overall operating conditions. The December growth was the weakest rate of improvement since July 2010, with slower increases in business activity, new orders and employment all weighing on the headline index at the end of the year, the bank said in its report.
Khatija Haque, head of Mena Research at Emirates NBD, said the slower rate of expansion in Dubai in December is unsurprising given the headwinds of strong dollar and increased uncertainty about both the global and regional economic outlook. "Nevertheless, the improvement in tourism sector activity in December is encouraging. Construction sector output also expanded at a robust pace in December, and we continue to expect this sector to be a positive contributor to Dubai's economic growth in 2016."
Overall, across the UAE, the growth in non-oil private sector dipped to a 40-month low in December 2015 after being weighed down by a muted growth in new work, a survey showed.Although new orders for businesses grew in December, across the UAE the growth was the slowest in the last four and a half years, Emirates NBD said in an earlier report.
In Dubai, at the sub-sector level, both construction and wholesale & retail businesses saw a slower improvement in overall business conditions. However, travel & tourism firms bucked the trend, with the health of the sector improving at the fastest rate since June.
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.The survey covers the Dubai non-oil private sector economy, with additional sector data published for travel & tourism, wholesale and retail and construction.
Business activity continued to increase across Dubai's private sector in December, but the latest expansion was the second weakest in 46 months (behind October 2015). Of the three monitored sub-sectors, both construction and wholesale and retail registered slower growth of activity amid reports of relatively muted market conditions. In contrast, travel & tourism companies saw a stronger expansion of business activity during December.
"Reflective of slower overall activity growth, private sector employment also expanded at a softer pace in December. Payroll growth weakened across both travel & tourism and construction companies, while staff numbers were broadly unchanged across the wholesale & retail sector," the bank said.