Dubai’s non-oil private economy improves in April on new business boost

Business conditions in Dubai’s non-oil private sector last month improved at the fastest rate in over four years

Business conditions in Dubai's non-oil private sector economy improved at a slower pace in July. Chris Whiteoak / The National

Business conditions in Dubai’s non-oil private sector economy last month improved at the fastest rate in over four years on the back of a boost in new business and improvement in wholesale and retail sector activity.

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 – edged up from March’s 57.6 to 57.9 in April, the highest since February 2015. The Index has registered above its long-run trend level of 55.2 throughout the first four months of 2019.

A number above 50 indicates expansion and below 50 signals contraction in economy.

“The sharp rise in output and new work in April is encouraging, as it suggests GDP growth is accelerating after a relatively soft 2018,” said Khatija Haque, head of Mena research at Emirates NBD.

“However, this growth in the volume of activity appears to be underpinned by price discounting, rather than an improvement in underlying demand. As a result, firms are reluctant to boost hiring and consumers are likely to remain cautious,” Ms Haque noted.

The improvement in the economic tracker mainly reflected the trend in new business, as employment was broadly unchanged during the month. Business conditions in the wholesale and retail sector improved at a series record pace, partly influenced by sharp price discounting and promotional activity, according to the Emirates NBD survey.

Across the non-oil private sector as a whole, prices charged fell for the 12th month running, it noted.

The rate of growth in total business activity, however, eased from March’s four-year high in April, but was among the sharpest registered since the series began in 2010.

The level of incoming new business increased at the fastest rate since January 2015 in April at 66.6. New sales growth at wholesalers and retailers hit a record high of 70.8, while construction firms registered a comparatively weaker rise at 55.7, albeit the strongest in 2019 so far.

“Faster growth of new work across the non-oil private sector helped to lift the 12-month outlook for activity to the strongest registered since the series began in 2010,” according to Emirates NBD.

In contrast, employment in the non-oil private sector was broadly unchanged in April, reflecting the continued trend shown over the past 12 months, in which the Employment Index has averaged exactly 50. Job numbers fell in both the travel and tourism and construction sectors, and rose slightly in wholesale and retail, according to the survey.