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Business conditions in Dubai's non-oil private sector economy continued to strengthen in February, at a similar rate to January. Total business activity rose at the fastest rate in nine months, while new business increased at a pace that remained above the 2018 average despite easing since January. Employment, however, fell at the fastest rate since the survey began in 2010.
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 - was unchanged from January's seven-month high of 55.8 in February. This signalled a strong improvement in business conditions that was faster than the trend for 2018.
Companies in the wholesale & retail sector reported the firmest volume growth in February, although with greater price discounting than in January. The headline index for the sector rose to an eight-month high of 58.1, above the comparable figure for the travel & tourism sector (56.8, a nine-month high). The third key sector monitored - construction - also registered a stronger performance in February (54.0).
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 growth in the volume of output and new work has been underpinned by continued price discounting, particularly in the wholesale & retail trade sector. Firms’ margins continue to be squeezed as selling prices have declined on average for the last 10 months, while input costs have increased over the same period. As a result, rising new orders have not translated into increased hiring and job growth in the private sector. Indeed, employment declined at the fastest rate on record in February.”
Key Findings
Dubai Economy Tracker unchanged from January’s seven-month high of 55.8
Strongest rise in output in nine months
Survey-record drop in employment
Business activity and employment
February data signalled a rise in business activity in the non-oil private sector. Moreover, the rate of expansion accelerated to the fastest since May 2018. Wholesale & retail posted the strongest growth among the three key sectors.
However, the rate of contraction in workforces was the strongest registered since the series began in January 2010, despite faster activity growth.
Emirates NBD Dubai Economy Tracker Index™
Seasonally adjusted, 50 = no-change
Sources: Emirates NBD, IHS Markit
Incoming new work and business activity expectations
Although total activity expanded at a sharper rate in February, growth of new business slowed since the start of 2019. That said, the pace of expansion was still stronger than the average for 2018. Moreover, new business in the travel & tourism sector increased at a near-record pace.
Dubai-based non-oil private sector companies remained strongly confident regarding the 12-month outlook in February. The respective index eased from January’s record, but was nonetheless among the highest registered since the series started in April 2012.
Input costs and average prices charged
Cost pressures strengthened slightly in February, as average input prices increased by more than in December and January. That said, the rate of inflation remained below the long-run survey average. Meanwhile, firms cut their charges for a record-equalling tenth successive month. Discounting was again centred on the wholesale & retail sector.
Emirates NBD Dubai Economy Tracker Index: Sector summary
Seasonally adjusted, 50 = no-change
Sources: Emirates NBD, IHS Markit
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