Both new work and output in Dubai increased in September continuing a trend of non-oil private sector expansion, although the economy grew at the slowest rate since April, according to Emirates NBD’s latest tracker.
The seasonally adjusted Emirates NBD Dubai Economy Tracker Index – a composite indicator designed to give an accurate overview of operating conditions in the non-oil private sector economy – fell to 54.4 in September, down from 55.2 in August.
A reading of below 50 indicates that the non-oil private sector economy is generally declining; above 50, it is generally expanding. A reading of 50 signals no change. The latest figure signaled a solid overall expansion, albeit one that was below the historical average, the Dubai lender said.
"Both output and new work increased in September but at a slightly slower rate than in August,” said Khatija Haque, head of Mena research at Emirates NBD, in a statement on Tuesday.
“However, employment declined on average in September, particularly in the travel and tourism sector. Selling prices in Dubai’s private sector declined for the fifth consecutive month, despite a modest rise in input costs. This suggests that firms increased promotional activity and discounts in order to boost demand.”
Stocks of pre-production inventories also rose at the slowest rate since July 2016, indicating companies were less willing to hold inventories, Ms Haque said.
As in August, travel and tourism was again the weakest performing industry sector, growing at 51.3 in September, followed by construction (53.8) and wholesale and retail (55.5), the tracker showed.
Meanwhile, employment levels fell for the first time since March and at the fastest pace since the survey began in January 2010. Some companies linked job shedding to cost cutting. That said, the rate of contraction was only slight, Emirates NBD reported.
Output increased during September, but the rate of growth slowed since August while remaining sharp overall and above the long-run average.
Inflows of new work also increased, but at the slowest rate in five months, while selling prices in Dubai’s non-oil private sector continued to fall amid intense competitive pressure and promotional activity. However, the degree of price discounting was modest during September, the report noted.
At the same time, firms remained highly optimistic about future output, the survey showed, with many citing Expo 2020 projects and marketing initiatives as reasons for anticipated higher output in one year’s time.