The growth momentum in private sector business activity in Dubai continued in June amid the fastest rise in new work since March 2015, according to data gathered by Emirates NBD.
The Dubai bank’s Dubai Economy Tracker Index, which tracks a number of non-oil private sector indicators, showed a sustained recovery in growth momentum across the Dubai private sector, led by improving business conditions in the travel and tourism, and wholesale and retail sectors.
At 54.6, up slightly from 54.5 in May, the headline seasonally adjusted Emirates NBD Dubai Economy Tracker Index picked up to its highest level since August 2015. A reading above 50 indicates economic expansion. The rise in the index since May was largely driven by a sharp and accelerated expansion of incoming new work.
Private sector business activity continued to expand at a robust pace in June, with the rate of growth unchanged from May’s 14-month high. Stronger growth in wholesale and retail activity, alongside an accelerated rise in travel and tourism, helped to offset a weaker expansion of construction output.
New business volumes increased for the fourth month running in June. Moreover, the latest rise was the fastest since March 2015, which survey respondents partly linked to greater consumer spending.
Despite a sustained upturn in private sector output, staffing levels were broadly unchanged in June. This contrasted with rising employment numbers during the past four-and-a-half years. Some firms noted that uncertainty about the economic outlook had led to more cautious hiring strategies.
Among the three key sectors the index focuses on, the wholesale and retail component was the best performing (index at 58.2), followed by travel and tourism (54.1), while the construction sector shows signs of slowing down (51.5).
“The improvement in the Dubai Economy Tracker index in June is underpinned by strong growth in new orders and output. The recovery in the travel and tourism sector last month is particularly encouraging as this sector had been relatively soft in previous months," said Khatija Haque, Head of MENA Research at Emirates NBD. But she added, "however, we note that the expansion has not led to increased employment, suggesting that firms are becoming more efficient in their operations.”
Looking ahead, private sector firms in Dubai remain optimistic about their prospects for growth over the next 12 months. However, the degree of confidence eased slightly since May and remained below the long-run survey average.
