Bank’s September tracker index shows increase in output, recruitment rebound
Private sector companies in Dubai experienced another month of improved business conditions in September, according to Emirates NBD’s latest economy tracker index.
The index, a composite indicator designed to give an accurate overview of operating conditions in the non-oil private sector, posted 55.1 points this month.
This was down from 55.7 in August and 55.9 July “but still well above the 50.0 no-change threshold”, Emirates NBD said.
On average in the third quarter of 2016, the headline index has signalled the fastest upturn in operating conditions across the non-oil private sector economy since the first quarter of 2015, the bank added.
September data indicated improving business conditions in all three key sectors monitored by the survey, including an accelerated upturn in travel & tourism (56.7), which helped to offset slower improvement in wholesale & retail (54.7), and another relatively subdued improvement in the construction sector (52.7), according to the report.
The headline tracker index is derived from indices that measure changes in output, new orders, employment, supplier 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, it is generally expanding. A reading of 50.0 signals no change.
Khatija Haque, head of MENA research at Emirates NBD, said: “The decline in the Dubai Economy Tracker index in September was only marginal, and overall the third quarter average indicates a faster pace of expansion compared to Q1 and Q2.
The tracker report said the latest upturn in private sector business conditions was driven by a sharp increase in output volumes during September, led by travel & tourism and wholesale & retail.
Staffing levels also increased for the third month running during September, thereby signalling a continued rebound in recruitment since June. However, the rate of employment growth remained marginal and weaker than the long-run survey average, the bank said.
New business volumes increased sharply in September, too, it said, although the pace of expansion eased from July’s recent peak. Meanwhile, cost pressures continued to moderate in September, with the rate of input price inflation slowing to its weakest since March.
The report said: “Softer cost inflation and intense competition for new work resulted in another drop in average prices charged by private sector companies, but the latest fall was only modest.”
Haque added: “Output and new order growth remains strong although company margins remain under pressure as firms reduced prices to secure new work.
“The rebound in the travel & tourism sector in September is encouraging, although it probably partly reflects the impact of the Eid holidays.”