Dubai’s non-oil private sector registered its slowest expansion of business activity since February 2010 last month, according to a new report.
The latest edition of the Dubai Economy Tracker released by Emirates NBD showed that the output index fell to just 51.4 in October from 56.0 in September, with only 18 percent of firms surveyed reporting higher output/business activity last month.
It said that weakness in travel and tourism activity weighed on the whole economy index with respondents citing subdued market conditions and dampened demand as contributing to weaker activity in the sector.
The output index in the travel and tourism sector declined to 49.0 last month, signaling a contraction in business activity in the sector.
Overall, new order growth was still relatively robust with an index reading of 55.0, although this was also the slowest rate of expansion in close to five years.
Given the relative softness of both output and new order growth, only 3.1 percent of firms surveyed reported increased employment in October, and the employment index (50.3) was only just above the neutral 50-level last month.
Survey respondents said they were also less optimistic about prospects over the coming year, with the business expectations index easing to 62.1 in October, from 65.8 in September.
Margins continued to be squeezed last month, with input costs rising at a faster rate than in September, while prices charged declined marginally. Output prices have declined every month since February this year, as firms compete for business and market share.
Khatija Haque, head of Mena Research at Emirates NBD, said: “Activity growth in Dubai slowed sharply in October, with the travel & tourism sector showing an outright contraction in output and employment.”
“However, we expect activity in this sector to recover as we head into the winter high-season. The construction sector survey data is encouraging as it signals relatively robust growth in new orders and output in October, despite heightened concerns about government spending in the face of sustained low oil prices,” she added.
Sponsored by Emirates NBD and produced by Markit, the survey provides an early indication of operating conditions in Dubai.
The survey covers the Dubai non-oil private sector economy, with additional sector data published for travel and tourism, wholesale and retail and construction.
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