Dubai's non-oil private sector growth accelerated in May to its strongest pace since 2010, with activity mainly driven by lower prices in the construction and retail sectors.
The seasonally-adjusted Emirates NBD Dubai Economy Tracker Index – a composite indicator providing an overview of operating conditions in the non-oil private-sector economy – rose to a four-year high of 58.5 in May from 57.9 in April. A reading above 50 indicates expansion and below the mark signals decline.
"The rise in output and new work continues to be underpinned by price discounting, as firms reduced their selling prices for the 13th consecutive month," said Khatija Haque, head of Mena research at Emirates NBD. "The earlier start to Ramadan this year may also have contributed to increased activity, particularly in the wholesale and retail trade sector."
Improved non-oil business activity was led by the wholesale and retail sector which recorded a reading of 61.9, followed by travel and tourism at 59.5 and construction with a reading of 54.6.
Overall, new business grew in May to the highest level in about four years and drove growth in total private sector activity.
Non-oil companies in Dubai slashed the prices of goods and services for the 13 consecutive month, albeit at the slowest rate in three months. The biggest discounts were in construction and wholesale and retail sectors.
However, construction companies in Dubai were confident about the 12-month outlook for activity levels in May, a sentiment that reflected sharper growth in new contracts during the month. New business placed with construction companies rose at the strongest rate since last November.
However, the rise in total business activity did not lead to the creation of more jobs, with employment rising only fractionally in May.
"The growth in the volume of activity and new work is not yet translating into meaningful job creation in Dubai’s private sector, which is the key concern for us," Ms Haque said.
Jobs in the travel and tourism and construction sectors declined, though the wholesale and retail sector posted the fastest growth in three years, according to the tracker.