Dubai’s private sector hiring remains slow despite overall growth

Dubai’s private sector economy continued to post growth in August although levels were slightly lower than July, according to Emirates NBD’s monthly economy tracker index.

The seasonally adjusted index, which touched a 16-month peak in July at 55.9, stood at 55.7 in August.

It remained above the 50.0 threshold for the sixth successive month.

But despite improving economic conditions, the latest data indicated only a marginal rise in private sector employment.

The pace of job creation also remained softer than the average since the survey began in 2010, the report said.

Some firms cited a lack of pressure on operating capacity, alongside a squeeze on margins from price discounting.

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Overall, all three key sub-sectors monitored by the survey experienced improving business conditions in August with wholesale and retail remaining the best performing (index at 55.5), followed by travel and tourism (54.7) and construction (52.6).

Survey respondents mainly pointed to strong sales growth in August and successful discounting strategies to stimulate client demand.

Higher operating costs were recorded across all three sub-sectors, but the rate of inflation remained modest and slower than the long-run survey average, the report said.

Meanwhile, average prices charged by private sector firms decreased at the fastest pace since February, which was linked to intense competition and promotional discounting strategies during August.

Khatija Haque, head of MENA Research at Emirates NBD, said: “After a strong reading in July, it is unsurprising to see a slightly softer Dubai Economy Tracker index in August.

“Output and new orders still increased sharply last month, partly due to more aggressive price discounting by firms. Businesses also appear to be more optimistic about the coming months, which is encouraging.”

Private sector business activity in Dubai picked up sharply in August, with the pace of expansion close to the 17-month high recorded during July.

Reports from survey respondents cited the launch of new products and a sustained upturn in incoming new work.

August data also indicated strong rise in new work – the second fastest since March 2015.

This also led to a rebound in confidence regarding the year-ahead business outlook, with the degree of optimism picking up from July’s six-month low.

Survey respondents cited more stable global economic conditions and expectations of rising demand from projects related to Expo 2020.