By Sarah Townsend
Travel & tourism continued to outperform but construction sluggish in September
Private sector companies in Dubai experienced a drop in growth in October compared to the previous month – signalling the slowest rate of expansion since April 2016, according to Emirate NBD’s latest economy tracker index.
The index declined to 53.3 in October from 55.1 in September, despite several previous months of improved business conditions.
Emirates NBD said that business activity and output continued to rise “at a robust rate”, with this sub-index standing at 57.9 last month. However, while this well above the no-change 50.0 level, it is lower than the 60.7 average recorded in the third quarter of the year.
New work also increased at the slowest rate in six months with this sub-index at 55.4, the bank said. Despite slower growth in new work and output, private sector firms in Dubai were more optimistic on average in October, with the business expectations index standing at 75.8 – the highest reading since June 2015.
The Dubai Economy Tracker Index is a composite indicator designed to give an accurate overview of operating conditions in the non-oil private sector.
This latest tracker showed that employment was marginally lower in October, with firms citing pressure on margins and more cautious hiring policies. Meanwhile, average output prices fell at the fastest rate since February – although input costs were broadly unchanged for the second month in a row.
The bank said the slowdown was evident across all main industry sectors in Dubai last month. The index for travel and tourism declined to 54.8 points from 56.7 in September, although output and new orders growth remained very strong (60.4 and 58.2 respectively), likely supported by further price discounting and the strength of the US dollar, and helping the sector to outperform others.
The wholesale and retail index declined to 53.3 in October – the weakest improvement in business conditions since March 2016. Although output growth was strong at 57.9, it was slower than the previous five months. New work growth also slowed but remained solid at 55.4 in October.
Meanwhile, the construction sector index fell to 51.8 in October, its lowest level since February 2016. This was largely on the back of slower output growth, Emirates NBD said.
The output index declined to 55.5 from 57.9 in September, while new work was largely unchanged at 52.3.
The construction sector saw employment rise last month, but at a slightly slower rate than in September. Overall growth remains modest at 51.2, while profit margins came under further pressure in October, the bank said.