Dubai’s private sector companies reported a solid improvement in business conditions in November compared to last month, driven by growth in travel and tourism companies, according to Emirates NBD.
The seasonally adjusted Dubai economy tracker index signalled the strongest improvement in business conditions since August, with the overall growth remaining broadly in line with the average since the survey began at the start of 2010.
The November data pointed to a mixed picture across the three key sectors monitored by the survey. Travel and tourism was the best performing area, followed by wholesale and retail while construction companies reported only a modest upturn in overall business conditions.
“The Dubai economy tracker signals a faster rate of expansion for non-oil firms in November, and this seems to have been led by the travel & tourism sector," said Khatija Haque, head of MENA Research, Emirates NBD.
"The introduction of visas-on-arrival for Chinese nationals (announced in September) may have contributed to the growth in this sector over the last couple of months.”
The rebound in the headline index was supported by a sharp and accelerated expansion of private sector output in November. Survey respondents commented on stronger consumer demand in particular, alongside new product launches and successful price discounting strategies.
However, the construction sector bucked the overall trend, with output growth slipping to a five-month low amid reports citing subdued investment spending among clients.
Employment levels increased slightly, but the rate of job creation remained weak in comparison to the trends seen prior to mid-2015. Sector data indicated a return to jobs growth in travel & tourism and wholesale & retail, but construction companies reported a drop in staffing levels for the first time since June, the survey said.
Stronger new business volumes were the main driver of the upturn in business conditions, with all three key sub-sectors reporting faster sales growth. Anecdotal evidence suggested that an improving economic backdrop and greater confidence among clients had underpinned the rise in new work.
Looking ahead, private sector companies are optimistic about their growth prospects for the year ahead, particularly travel & tourism companies. A number of firms cited projects related to Expo 2020, alongside hopes of a general upturn in economic conditions across the region.
The data signalled that input price inflation edged up to its strongest for five months, led by the steepest rise in construction sector costs since August 2015. Despite widespread reports citing higher raw material prices, private sector companies continued to lower their average charges in November.
Price discounting has now been recorded for four months running, linked to competitive pressures and efforts to secure new work, the survey said.
The 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. It covers the Dubai non-oil private sector economy, with additional sector data published for travel & tourism, wholesale & retail and construction.For all the latest business news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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