Emirates NBD Dubai Economy Tracker Index, a key measure of the emirate's private non-oil economic health dipped slightly in July as the pace of employment stagnated, however growth momentum outlook remains robust.
The composite indicator fell marginally to 56.3 in July from 56.5 in June. A reading below 50 suggests that the non-oil economy is generally declining, whereas a reading above 50 indicates that it is expanding.
“While the headline index continues to reflect strong growth in the non-oil economy in July, firms’ margins continue to be squeezed as they lower selling prices, particularly in the trade and hospitality sectors," said Khatija Haque, the head of Mena research at Emirates NBD. "Employment growth remains soft overall.”
Growth in the non-oil private sector in July was boosted by gains in the wholesale and retail industries index which stood at 57.9 last month. That was followed by travel and tourism at 56.3 and the construction at 54.8.
The report noted that there was still a sharp increase in output despite the slightly slower pace than June. Those gains were attributed by respondents to an increase in projects and more favourable economic conditions.
New business expanded at the fastest pace since April as a result of promotional activities and stronger underlying demand conditions, respondents told the surveyors.
Still, job creation continued to be slight as it has been over the past five months despite the surge in expansion witnessed over the same period.
The growth in July however is another indicator of an improving local economy which in recent years has stalled in the wake of the collapse of oil prices.
Despite reverberations from subdued oil prices after crude entered a bear market on the back of an increase of supply globally, the non-oil economy of the UAE continues to perform well thanks to a rise in global trade, tourism, as well as spending and investment in infrastructure ahead of the Dubai Expo2020.