Wholesale and retail spur Dubai's non-oil economy in February, says Emirates NBD
Total business activity rose at the fastest rate in nine months according to the latest survey
Operating conditions in Dubai’s non-oil private sector economy in February maintained the pace of improvement from January, with total business activity rising at the fastest rate in nine months, underpinned by performance of wholesale and retail sector in the emirate.
New business increased at a pace above the 2018 average despite easing since January. Employment, however, fell at the fastest rate since the survey began in 2010.
The seasonally-adjusted Emirates NBD Dubai Economy Tracker Index – a composite indicator designed to give an overview of operating conditions in the non-oil private sector economy – in February remained unchanged from January’s seven-month high of 55.8. A reading below 50 indicates the non-oil private sector economy is generally declining and above 50 means it is expanding. A reading of 50 signals no change.
Companies in the wholesale and retail sector reported the firmest volume growth in February, although with greater price discounting than in January. The headline index for the sector rose to an eight-month high of 58.1, above the comparable figure for the travel and tourism sector, which came in at 56.8, its nine-month high.
The construction sector also registered growth in February, rising to 54 from 53.8 in January, the fastest pace since November, according to the survey.
“The growth in the volume of output and new work has been underpinned by continued price discounting, particularly in the wholesale and retail trade sector,” Khatija Haque, head of Middle East and North Africa research at Emirates NBD, said.
Margins for the businesses "continue to be squeezed" as selling prices have declined on average for the last 10 months, while input costs have increased over the same period, which means that the “rising new orders have not translated into increased hiring and job growth in the private sector”, Ms Haque said.
The UAE Government has introduced a series of measures and laws to buoy economic growth. These initiatives include infrastructure projects, increased government spending, offering long-term visas to expatriates working in certain industries, allowing full foreign ownership in select businesses outside free zones and lowering the cost of doing business. Dubai is also implementing steps and policies to spur growth and make it more appealing for the business community.
Although total activity expanded at a sharper rate in February, growth of new business slowed slightly since the start of 2019. The pace of expansion, however, was still stronger than the average for 2018, as new businesses in the travel and tourism sector increased at a near-record pace, according Emirates NBD.
Dubai-based non-oil private sector companies also remained confident regarding the 12-month outlook in February.
Updated: March 11, 2019 12:16 PM