Emirates NBD Dubai Economy Tracker Index shows sharp improvement in business conditions in October
Dubai's non-oil private sector made a strong start to the final quarter of 2017 with steep expansions in activity and new business, according to a new report.
The seasonally adjusted Emirates NBD Dubai Economy Tracker Index showed a sharp improvement in business conditions in October.
The index rose to 55.6, from 55.2 in September, with wholesale & retail the best performing sector in October, ahead of travel & tourism and construction.
A reading of below 50.0 indicates that the non-oil private sector economy is generally declining; above 50.0, that it is generally expanding. A reading of 50.0 signals no change.
Khatija Haque, head of MENA research at Emirates NBD, said: “The improvement in the Dubai Economy Tracker index is largely on the back of stronger output and new work growth, although intense competition is still pressuring firms’ pricing power and margins. Businesses surveyed were more optimistic at the start of Q4, which is typically ‘high season’ for the travel & tourism sector.”
Private sector companies noted a further increase in business activity in October, in part reflecting improving client demand. The rate of growth was sharp overall, and broadly in line the average seen throughout 2017 so far.
At the sector level, the construction industry reported the strongest output expansion for over two-and-a-half years in October.
In response to rising output requirements, firms continued to hire additional staff for the eighth month running. Job creation accelerated and reached a solid pace overall. Moreover, employment growth was the most marked since April.
October data also signalled a sharp increase in incoming new business among non-oil private sector companies operating in Dubai. Anecdotal evidence pointed to strong underlying demand in the domestic market. The wholesale & retail sector registered the fastest rates of new business expansion during the latest survey period.
Future growth sentiment remained strongly positive in October and hit a ten-month high. Companies frequently noted that an expected economic upturn and upcoming new projects related to Expo 2020 had underpinned business confidence.
Input cost pressures faced by non-oil private sector firms ticked up in October and hit a 26-month high. The rate of input price inflation was solid overall, albeit below the series long-run average. At the sub-sector level, companies in the construction industry reported the sharpest rates of increase.
In spite of rising cost pressures, selling prices continued to fall for the second month in a row during October, amid reports of intense market competition. Companies in the travel & tourism and wholesale & retail sectors registered a decrease in output charges, whilst those in the construction sector noted a marginal increase.