Business conditions in Dubai improved last month at the fastest pace in more than a year, thanks to new work across businesses and holiday spending during Eid, data showed.
According to a survey by Emirates NBD, retail activity in Dubai was the best performing sector of the economy last month amid an overall improvement in business activity from the lows of February.
The bank’s Economy Tracker Index, which surveys non-oil private sector businesses in the emirate about new orders, employment and inventories, found that overall business conditions in Dubai were improving at the fastest pace since March last year.
The seasonally adjusted index increased to 55.9 last month from 54.6 in June. A figure above 50 means business is expanding, while below 50 signals a contraction.
The findings tally with the results of the UAE’s Purchasing Managers’ Index for last month, which also found that economic sentiment in the country as a whole rose to a 10-month high.
“The improvement in the Dubai Economy Tracker index in July is consistent with the rise in the whole UAE Purchasing Managers’ Index last month, and is underpinned by stronger new work and output growth,” Khatija Haque, head of Mena research at Emirates NBD, said in the report. “The wholesale and retail sector in particular probably benefited from holiday spending over Eid.”
The private sector’s new orders expanded at the fastest pace since March last year, while the retail and wholesale trade was the best performing sub-sector, recording an index of 57.3.
In February, the Dubai tracker, which is considered one of the earliest performance indicators, found that Dubai’s economy began to decelerate for the first time since 2010 as the index shrank to 48.9 – its first ever slip into negative territory.
But in each of the months since then, Emirates NBD has reported a recovery in conditions, with the latest reading now back above the long-run survey average of 55.1.
But that is not saying much. With the UAE economy smarting from the effects of low oil prices and a strong dirham as well as a gloomy global economic outlook, growth in the Dubai economy still remains fragile.
The IMF is forecasting that Dubai’s economic growth will slow to 3.3 per cent this year from 3.5 per cent last year.
Although the Dubai government gets only a fraction of its revenues from oil, the emirate is still exposed to oil prices because it relies on trade and tourism from other oil-rich economies such as Abu Dhabi and Saudi Arabia.
lbarnard@thenational.ae
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