An uptick in construction activity in Dubai in December helped buttress the non-oil economy, which expanded at the fastest rate since July, according to a new report.
Strong private sector business sentiment, across the key sectors of travel and tourism, wholesale and retail and construction, was the highest since June 2015, according to the seasonally-adjusted Emirates NBD Dubai Economy Tracker Index.
The gauge rose to 55.9 in December, up from 55.2 in November, the highest since July. A reading above 50 implies expansion and lower than 50 contraction.
“The rebound in construction sector activity in December is particularly encouraging after relatively sluggish performance for most of H2 2016,” said Khatija Haque, head of MENA research at Emirates NBD. “We expect construction will be a key driver of growth in Dubai in 2017 as preparations for Expo 2020 move up a gear.”
Dubai has unveiled a Dh47.3 billion budget for this year, with the construction sector receiving a major boost from a 27 per cent jump in infrastructure spending as the emirate prepares for Expo 2020. The budget shows a 3 per cent rise in overall expenditure.
The UAE as a whole experienced strong non-oil private sector growth in December, with improved sentiment coming amid a rise in oil prices following agreed output cuts by both Opec and non-Opec producers, suggesting that businesses believe that the negative impacts of fiscal austerity may be tailing off.
Emirates NBD’s purchasing managers’ index (PMI) for the UAE rose to 55 in December from 54.2 in November.
Travel and tourism was the best performing sub-category in Dubai in December, with a reading of 56.9, followed by wholesale and retail with 56.4. The construction sector shifted at the end of last year, rising 54.3 in December from 51.8 in November.
Overall, the improved output growth was driven by a supportive economic backdrop, improving new order volumes and competitive pricing strategies, the report said.
New work in December grew at the fastest pace since early 2015, with the pickup in construction the steepest since May. Rising business and consumer spending also boosted new order books, the report added.
Job creation remained nearly flat in December, although the construction had the fastest increase in staffing levels, with new hires rising to the strongest level since May.
dalsaadi@thenational.ae
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