Dubai private sector activity rises to highest level in more than a year

Tourists take photos of the fountain at the Burj Khalifa lake in Dubai. The travel and tourism sector continued to expand in May. Satish Kumar / The National

Private sector business activity in Dubai grew last month the most since March of last year, according to data gathered by Emirates NBD.

The Dubai bank’s Dubai Economy Tracker Index, which tracks a number of non-oil private sector indicators, showed sharp expansion last month.

New sales wins and greater confidence among businesses and their clients meant the latest expansion of private sector output was the fastest since March 2015 and above the average of the index since it began in 2010, the bank said.

The index itself, which records output, employment, suppliers’ delivery times and stocks of purchased goods, as well as new orders, was at 54.5 in May, up from 52.7 the previous month, and the strongest gain since last August. A reading above 50 indicates expansion, and the index has climbed each month since hitting its low point of 48.9 in February.

While the recovery is strong, there are still signs of fragility as Dubai, in common with other economies around the region, feels the effects of lower oil ­prices, which have doubled since their low at the start of the year but still are less than half their level two years ago.

“The improvement … is due mostly to strong growth in output and new work, which is encouraging as it suggests that demand remains robust,” said Khatija Haque, Emirates NBD’s head of economic research for the Middle East and North Africa. But, she added, “margins are still being squeezed as firms reduce prices to secure new work”.

In other findings, employment levels increased across the private sector.

Among the three key sectors it focuses on, the wholesale and retail component was the best performing (index at 56.4), followed by construction (55.5), with travel and tourism expanding but at a pace that was the lowest in three months (51.8).

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