Dubai’s retail, construction sectors see strong growth in June

Strong growth was witnessed in construction and wholesale and retail sectors in Dubai during June, the latest monthly survey by Emirates NBD has found.

However, the seasonally adjusted Emirates NBD Dubai Economy Tracker Index fell to 56 in June, from 57.6 in May, because of a slowdown in the growth of the travel and tourism sector.

Wholesale and retail was the strongest performer in June (58.6), followed by construction (57.1) and travel and tourism (54.9).

Overall, the report found that growth in business activity softened from May’s 40-month high, although the pace of expansion remained sharp overall.

The current phase of rising output first began in March 2016. Firms cited favourable business conditions and strong inflows of new work as reasons behind higher business activity.

While new work expanded across Dubai’s non-oil private sector, the rate of growth softened from that seen in May, the survey found.

Meanwhile business activity expectations improved to the highest since the index began in April 2012 in June.

Anecdotal evidence suggested that “marketing initiatives, solid business conditions and a strong pipeline of new orders” led to optimism in the market, the report stated.

Khatija Haque, head of MENA Research at Emirates NBD, said: “Despite the decline in the headline DET index in June, new work and output both increased at a sharp rate, reflecting strong demand.

“The wholesale and retail trade sector performed particularly well last month, which may have been partly due to the Eid holidays. The sharp improvement in business conditions in the construction sector supports our view that infrastructure investment will be an important driver of economic growth this year.”

In terms of job creation, the survey found that hiring remained subdued in June.

The rate of growth was “fractional”, matching that recorded in May. While some firms hired additional staff in anticipation of new project starts, these were negated by those that reduced payroll numbers to cut costs.

The report also found that average cost burdens increased at a slower rate last month. Input price inflation continued for the third month running, but the degree of cost pressure was the weakest, it said.

Output charges dropped in June amid promotional efforts across the non-oil private sector. However, the degree of price discounting was marginal.