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Emirates NBD Dubai Economy Tracker
(9 April 2019)
Output and new work rise sharply in March, but price discounting continues.

Dubai’s non-oil private sector economy expanded at a faster rate in March. Total business activity (output) increased at the fastest rate since January 2015. Moreover, two of the three key monitored sectors – travel & tourism and wholesale & retail – posted series record increases in activity. With new business growth also accelerating, expectations for the next 12 months were the second-strongest on record, just shy of January’s peak.  Price discounting, particularly in the wholesale & retail sector, was likely a key driver of demand in March. 

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 – rose from 55.8 in February to 57.6 in March, the highest since May 2018. It was also the joint-highest figure in nearly two years and above the long-run average for the series since 2010 (55.2).

Business conditions improved at stronger rates in travel & tourism and wholesale & retail. Travel & tourism saw its headline index reach a record high of 59.8, while the headline figure for wholesale & retail was 59.7, just shy of the peak set in October 2017 (60.0). In contrast, business conditions at construction firms were the softest in 28 months (51.8), as weaker new order growth weighed on the sector index.

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:

“While the rebound in the headline Dubai Economy Tracker Index is encouraging, it is clear that firms continue to price discount in order to secure new work and boost activity.  The pressure to cut costs means that the recovery in the volume of activity has not translated into much job growth in the private sector.”

Key Findings

Dubai Economy Tracker improves to ten-month high of 57.6
Fastest expansion in business output since January 2015
Output expectations second-highest on record

Business activity and employment

Total non-oil private sector output increased at the fastest pace since January 2015. Moreover, the rate of expansion was the fifth-strongest on record since the series began in 2010. Of the three key sectors, travel & tourism posted the steepest growth.

Workforces were expanded to support activity levels in March, although the rate of job creation was modest. This partly reflected broadly no change in staffing in the travel & tourism sector.

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 to private sector non-oil firms in Dubai rose in March. Moreover, the rate of expansion was the fastest since May 2018. Travel & tourism posted the strongest growth among the three key sectors. Meanwhile, companies’ expectations for total activity over the next 12 months were the second-strongest on record in March.

Input costs and average prices charged

Average input prices rose for the twelfth month running in March. That said, the rate of inflation was modest and eased since February. Cost pressures were strongest in the travel & tourism sector.

Non-oil private sector firms in Dubai cut their prices charged for goods and services for the eleventh month running in March. This marked the longest sequence of discounting since the series began in 2010. The rate of price discounting was the steepest since December 2018.

Emirates NBD Dubai Economy Tracker Index: Sector summary

Seasonally adjusted, 50 = no-change

Sources: Emirates NBD, IHS Markit.

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