Business activity in Dubai’s private sector grows at strongest rate since 2010

Total business activity in Dubai’s non-oil private sector increased at the strongest rate since 2010, the monthly economy tracker from Emirates NBD found.

The seasonally adjusted index rose to a 52-month high of 58.5 in May, from 57.9 in April.

The rise in the headline figure reflected sharper growth of total activity and new business, while the contribution from employment was almost neutral, the report said.

Wholesale and retail remained the best-performing of the three key monitored sectors in May (61.9), mainly reflecting a comparatively strong increase in new business and some employment growth.

Travel and tourism registered the second-strongest overall improvement in business conditions on record (59.5) despite a slight fall in jobs, while construction (54.6) was in line with its long-run trend.

Overall, the rate of growth in business activity increased for the fourth time in the first five months of 2019. Growth rates were at new peaks in travel and tourism as well as wholesale and retail, while construction posted the second-fastest increase on record.

The record increase in total activity was driven by faster growth in new business.

Travel and tourism as well as wholesale and retail registered sharp increases in new work during the month. Faster intakes of new work contributed to another improvement in 12-month expectations for activity across the non-oil private sector in May.

However, employment in the non-oil private sector rose only fractionally in May.

Although the strongest since July 2018, the rate of job creation remained much weaker than the long-run trend.

Jobs continued to decline in both the travel and tourism and construction sectors, although wholesale and retail posted the fastest growth in three years, the report found.

Khatija Haque, head of MENA Research at Emirates NBD, said: “The earlier start to Ramadan this year may also have contributed to increased activity, particularly in the wholesale and retail trade sector. Nevertheless, the growth in the volume of activity and new work is not yet translating into meaningful job creation in Dubai’s private sector, which is the key concern for us.”

In terms of prices, average input costs rose at the slowest pace in the current 14-month sequence of inflation.

Prices charged for goods and services fell for the 13th month running, although at the slowest rate in three months.

Discounting was most notable in the construction and wholesale and retail sectors, the report stated.

“The Dubai economy tracker survey points to faster growth in Dubai’s non-oil private sector in May. However, the rise in output and new work continues to be underpinned by price discounting,” Haque added.