Dubai – Mubasher: The emirate of Dubai enjoyed an improvement in business conditions in its non-oil private sector in March.
Output and new work registered a “sharp growth” supporting the emirate as a whole. Despite that, “employment slipped into contraction for the first time since February last year,” according to a new report released on Monday.
The Emirates NBD Dubai Economy Tracker Index registered 55.3 last month, down from 55.8 in February. The figure, which was well above the 50.0 threshold, represented “a marked expansion that was in line with the historical average, albeit the lowest for three months.”
As for the three monitored sub-sectors, travel and tourism took the lead with 56.7, followed by wholesale and retail with 56.3, and construction at 53.2.
“While the Dubai Economy Tracker fell to a four-month low of 55.3 in March, it remained firmly in expansionary territory, with travel and tourism the outperformer. That being said, firms continue to make price discounts in order to bolster demand,” Daniel Richards, MENA economist at Emirates NBD.
A decline in input costs for the first time in more than two years is likely to have contributed to the positive performance, although “squeezed margins appear to be taking their toll on employment,” Richards added.
Employment in Dubai’s non-oil private sector fell below the 50.0-threshold for the first time in 13 months or since February 2017, as job shedding reentered the sector.
“Nevertheless, we anticipate faster growth in the Dubai economy this year, bolstered by ongoing infrastructure projects and greater government spending,” the economist highlighted.
“The finding followed unchanged employment levels in the preceding survey period. The rate of contraction was marginal overall, however,” Emirates NBD’s report released on Monday showed.
In terms of incoming new work and expansions, successful marketing and promotional strategies by private non-oil companies in Dubai helped generate strong new work growth. The report further noted that the rate of expansion was mostly in line with average seen in the past couple of years.
“The most recent improvement in new work extended the current sequence of growth to 25 months,” Emirates NBD said.
On another note, business confidence slowed to a seven-month low in March, although data showed that its prospective trajectory “remained strongly positive overall.”
As for inflation, “average cost burdens faced by non-oil private sector firms fell for the first time since February 2016. Panel respondents frequently reported price discounting at suppliers. That said, the rate of decline was fractional overall,” the report said.
Moreover, prices charged fell at a moderate pace last month, ending a three-month sequence of inflation
“Businesses in Dubai noted that output charges had been reduced to help stimulate client demand,” the report concluded.
