Company News

Emirates NBD Dubai Economy Tracker
(16 January 2019)
Dubai non-oil private sector growth slows in December


Non-oil private sector growth in Dubai eased in December. Although total activity continued to rise at a strong overall pace, new business increased at the second-slowest rate in over two years and employment remained broadly unchanged. Inflationary pressures remained weak as input costs rose modestly and firms continued to cut their charges.

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 from November’s 55.3 to 53.7 in December. This was the second-lowest reading in over two years and below the historic average (since 2010) of 55.2, signalling relatively muted non-oil growth. Moreover, the average for the fourth quarter of 2018 (53.8) was the lowest of any quarter since Q1 2016.

All three of the key monitored sectors – construction, wholesale & retail and travel & tourism – registered slower improvements in business conditions in December. Travel & tourism continued to post the weakest overall growth (52.0), followed by construction (53.7) and wholesale & retail (54.2).

A reading of below 50.0 indicates that the non-oil private sector economy is generally declining; above 50.0, that it is generally expanding. A reading of 50.0 signals no change.

The survey covers the Dubai non-oil private sector economy, with additional sector data published for travel & tourism, wholesale & retail and construction.

Commenting on the Emirates NBD Dubai Economy Tracker, Khatija Haque, Head of MENA Research at Emirates NBD, said:

“The headline Dubai Economy Tracker Index fell to 53.7 in December, from 55.3 the previous month. All three of the individual sectors tracked in the index expanded at a slower pace in December as compared to November, with the construction sector slowing from the particularly strong 57.5 seen last month to 53.7 in the latest print. Travel & tourism remained the underperformer, falling from 52.8 to 52.0, compared to wholesale & retail trade’s 54.2.

“Output in the whole of Dubai survey remained solidly expansionary, with over a quarter of respondents seeing greater activity, while nearly a third of firms saw greater new orders, in a positive for future output. The majority also expected future conditions to improve, with only 5.3% expecting a deterioration over the next 12 months.

“The squeeze on firms’ margins was less than seen in November as input costs grew at the slowest pace since August, while price discounting also slowed. Only 6.4% of firms reported price cutting, compared to 16.9% the previous month. Nevertheless, headcount remained flat, with less than 1% reporting increased employment.

“December’s index reading takes the 2018 average to 55.0 – moderately weaker than the 56.0 averaged in 2017 but nevertheless a more robust reading than seen in 2015 and 2016. Our real GDP growth estimate for the year is 2.8%, in line with that recorded in 2017.”

Key Findings

  • December Economy Tracker rounds off softest quarter since Q1 2016
  • All three key sectors record slower expansions in December
  • Weak inflationary pressures at end of 2018

Business activity and employment        

Total non-oil private sector output in Dubai rose for the thirty-fourth consecutive month in December. The rate of growth eased since November to the third-weakest in 2018, but was broadly in line with the historic survey average (since 2010). Construction continued to record the sharpest pace of expansion.

December data suggested improving productivity in Dubai as, although output rose strongly, employment was little-changed. This followed a fractional rise in staffing levels during November and declines in both September and October. Moreover, jobs contracted in the latest month in the construction and travel & tourism sectors.

Emirates NBD Dubai Economy Tracker Index™

Seasonally adjusted, 50 = no-change

Sources: Emirates NBD, IHS Markit

Incoming new work and business activity expectations

Inflows of new business continued to rise in December, but at a slower pace. With the exception of October, growth was the weakest since October 2016.  Rates of expansion slowed in all three major sectors monitored, most notably in construction. Meanwhile, the 12-month outlook for business activity dipped to a five-month low in December but remained relatively strong.

Input costs and average prices charged

Average input prices in the non-oil private sector rose only modestly in December, with the rate of inflation at a four-month low and below the long-run series average. At the sector level, a relatively strong increase in travel & tourism contrasted with a fall in input costs in the wholesale & retail sector.

With costs rising at a subdued overall rate, private sector companies cut their charges for goods & services for the eighth month running in December. The rate of reduction slowed compared with November, however.

Emirates NBD Dubai Economy Tracker Index: Sector summary

Seasonally adjusted, 50 = no-change




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