Emirates NBD's Dubai Economy Tracker Index shows that retail sector showed the strong improvement in November
Private sector business conditions shows significant improvement with steep growth in output and inflows of new work, according to the seasonally adjusted Emirates NBD Dubai Economy Tracker Index.
The index – which is designed to give an overview of operating conditions in non-oil sectors – eased to 55.3 from 55.6 in October, a rate of growth that remains above the series’ long-run average. According to Emirates NBD, a reading of below 50.0 indicates a decline in the non-oil sector is declining, while a reading about 50.0 shows expansion.
Of the sectors covered, wholesale and retail showed the strongest improvements in business conditions.
“The November survey continues to show solid growth in Dubai’s economy last month, at a similar pace to the previous two months,” said Khatija Haque, head of MENA research at Emirates NBD.
“However, the softness in employment and lack of pricing power suggests that the environment for businesses remains challenging.”
The report found a sharp increase in business activity during November, extending a 21-month sequence of improvement, with output rising at the sharpest rate in the construction sector. Additionally, job creation was recorded for the ninth consecutive month, with man survey respondents saying they hired additional staff to meet new output requirements throughout the month.
The survey also found that demand for goods and services produced in Dubai increased during November, underpinned by strong domestic demand. The ‘new business index’, however, was below its long-run average, with the latest figures showing the softest growth recorded in the last six months.
The data found that business confidence was “strongly positive” in November, which Emirates NBD believes reflects optimism surrounding the expected economic benefits of Expo 2020.
The data also indicated a rise in the cost burdens faced by non-oil private sector. However, the rate of increase softened since the preceding survey, and was subdued when compared to historical data.
In cases in which input rice inflation was recorded, firms noted that the cost of raw materials had gone up in response to increased demand. Inflation was registered in all three of the monitored sub-sectors, with construction companies reporting the most significant rise in operating costs.
While output charges fell throughout November, the rate of price discounting was found to be marginal and slower than October’s.