Businesses remain upbeat

Exporters, manufacturers and retailers remained upbeat about prospects for the third quarter as they geared up for busier days ahead with increased sales and profits, the Dubai Department of Economic Development, or DED, said on Tuesday.

Half of businesses in Dubai expect the third quarter to bring in increased sales and profits while another 20 per cent of respondents in a survey said they expect to see stable sales in the third quarter.

For the third quarter, 86 per cent of the businesses surveyed said they will retain their current employee count while 11 per cent spoke of plans to increase their workforce, the latest quarterly business survey by the DED reveals.

“Sales expectations are especially higher among small and medium enterprises but large companies lead in comparison when it comes to investment outlook for the year ahead,” the DED said. At 106 points, the composite Business Confidence Index points to positive business sentiments, although it is lower than the level recorded for the previous quarter. The decline is an expected fallout of the summer holidays and onset of the holy month of Ramadan, which businesses factor into their estimates.

The survey showed that prices of most goods and services are expected to remain stable, compared to the second quarter.

In its first quarterly survey released in May, the DED found out that expectations were riding high especially in the manufacturing sector amid rising confidence among small and medium enterprises and a stronger investment focus on upgrading technology.

The UAE leads the world in business confidence and stands alone in positive territory in the global economic survey index, leaving behind the US, UK, Hong Kong, Singapore and others on the negative side of the index, according to the Global Economic Conditions Survey in the second quarter of 2012.

Sami Al Qamzi, director-general of the DED, said the quarterly surveys have been designed to provide an objective assessment of the conditions and environment in which businesses in Dubai operate and plan their activities.

“The surveys have now become a useful benchmark for doing business in Dubai Reliable and first-hand insight on the business dynamics and expectations in Dubai will also help the government improve its economic policies and regulations in order to achieve a more favourable business environment,” he said.

Al Qamzi pointed out that the overall business outlook for the third quarter was largely driven by the upbeat expectations of the manufacturing sector while trading and services maintain a lower profile. Sales expectations are relatively higher for companies engaged in the manufacturing of glass, garments, furniture, chemicals and cement.

A total of 500 companies in Dubai were covered in the survey. The companies were asked to indicate if they anticipated an “increase”, “decrease” or “no change” in key indicators such as sales revenues, selling prices, volumes sold, profits and number of employees.

According to the DED survey, growing demand in overseas markets has made exporters in Dubai relatively more upbeat on sales and profitability. “Within the services sector, travel, transportation and construction companies are more optimistic compared to other sub-sectors. Around 40 per cent of the construction companies expect to win new contracts but restaurants and hotels anticipate a drop in business during Ramadan. At the same time higher demand expected during the Eid holidays is fuelling expectations in the trading sector,” the DED said.

Some 86 per cent of the businesses surveyed said they would retain their current employee count while 11 per cent spoke of plans to increase their workforce. Manufacturing firms continue to be the most optimistic on hiring.

“Competition, insufficient demand, government fees, and uncertainty on regulations remain the top challenges listed by respondents — both SMEs and larger enterprises alike — in the survey. Larger enterprises mentioned utility costs and political uncertainty in the region too among key challenges,” the DED said.

issacjohn@khaleejtimes.com