Emirates NBD Dubai Economy Tracker Index says activity growth remained partly driven by competitive pricing in May
Total business activity in Dubai's private sector non-oil economy increased at its strongest rate for nine years in May, according to new research.
The seasonally adjusted Emirates NBD Dubai Economy Tracker Index said activity growth remained partly driven by competitive pricing, notably in the construction and wholesale and retail sectors.
The index rose to a 52-month high of 58.5 in May, from 57.9 in April, reflecting sharper growth of total activity and new business, while the contribution from employment was almost neutral.
Wholesale and retail remained the best-performing of the three key monitored sectors in May (61.9), mainly reflecting a comparatively strong increase in new business and some employment growth.
Travel and tourism registered the second-strongest overall improvement in business conditions on record (59.5) despite a slight fall in jobs, while construction (54.6) was in line with its long-run trend.
Khatija Haque, head of MENA Research at Emirates NBD, said: “The Dubai Economy Tracker survey points to faster growth in Dubai’s non-oil private sector in May. However, the rise in output and new work continues to be underpinned by price discounting, as firms reduced their selling prices for the 13th consecutive month.
"The earlier start to Ramadan this year may also have contributed to increased activity, particularly in the wholesale and retail trade sector. Nevertheless, the growth in the volume of activity and new work is not yet translating into meaningful job creation in Dubai’s private sector, which is the key concern for us.”
The rate of growth in total non-oil private sector business activity in Dubai accelerated for the fourth time in the first five months of 2019, to a new series-record high. Growth rates were at new peaks in travel and tourism and wholesale and retail, while construction posted the second-fastest increase on record.
In contrast, employment in the non-oil private sector rose only fractionally in May. Although the strongest since July 2018, the rate of job creation remained much weaker than the long-run trend.
Price pressures remained weak in May. Average input costs rose at the slowest pace in the current 14-month sequence of inflation. Meanwhile, prices charged for goods and services fell for the thirteenth month running, albeit at the slowest rate in three months. Discounting was most notable in the construction and wholesale and retail sectors.