Source: Emirates NBD. Emirates NBD Dubai Economy Tracker Index: Sector

summary. Seasonally adjusted, 50 = no-change.

• Data from April shows a continuing upswing in private sector output.
• Compared to March, all three major sub-sectors reported greater new business growth.
• Employment figures are increasing again, but at a slower rate than the survey average.

Dubai’s private sector companies reported continued recovery and growth momentum since the survey’s record low in February. The seasonally adjusted Emirates NBD Dubai Economy Tracker Index reached 52.7 in April, slightly up from 52.5 in March, indicating the fastest improvement in Dubai’s overall business conditions since November 2015.

The headline index has now surpassed the crucial 50.0 ’no-change value’ for two consecutive months, but the most recent reading remained lower than the survey’s long-term average of 55.1. During April, all three key sub-sectors tracked by the survey saw improved business conditions, with the wholesale and retail segment leading the way.

The Emirates NBD Dubai Economy Tracker Index is calculated using individual diffusion indices that track changes in factors like output, new orders, employment, supplier delivery times, and purchased goods inventories. A reading below 50.0 suggests a declining non-oil private sector economy, while a reading above 50.0 suggests expansion. A 50.0 reading indicates no change.

The survey encompasses Dubai’s non-oil private sector economy, with additional sector-specific data published for construction; travel and tourism; and wholesale and retail.

Khatija Haque, Head of MENA Research at Emirates NBD, stated: “The improvement in the Dubai Economy Tracker in April is encouraging, particularly because it reflects faster new orders and output growth. This most recent survey supports our view that Dubai’s economy is growing in 2016, although at a slower pace than last year.”

Key findings:

Business activity and employment

A strong and accelerated increase in business activity drove the recent improvement in operating conditions across Dubai’s private sector. Additionally, April’s overall output growth rate was the highest since September 2015. Several firms mentioned stronger underlying client demand as well as successful marketing and promotional campaigns.

Despite the rebound in business activity, recent data indicated that private sector job creation remained relatively subdued. The main exception was a significant rebound in employment growth among construction companies, reaching its fastest pace in five months.

Incoming new work and business activity expectations

In April, incoming new work among private sector companies increased once again, with the rate of new business growth reaching its highest point since November 2015. Survey respondents attributed the increased client demand to improved domestic market conditions, reduced economic uncertainty, and sustained price discounting strategies. Wholesale and retail firms reported the fastest increase in new business, while construction and travel and tourism also saw solid growth.

Dubai’s private sector companies are optimistic about their growth prospects in the coming year. Travel and tourism was the most optimistic subsector surveyed, followed by wholesale and retail. However, recent data indicated that overall business confidence has declined since March and remained below the 2015 average.

Input costs and average prices charged

In April, data indicated only a slight increase in input prices across the private sector. This, however, stood in contrast to largely stable cost burdens in March and falling input prices earlier in 2016. At the same time, average prices charged by Dubai companies fell for the fourth consecutive month, led by travel and tourism. This was generally attributed to competitive pricing strategies and related attempts to boost customer spending.