Hiring slows in construction, travel and tourism sectors in Dubai

Dubai’s non-oil private sector grew faster in the first half of the year as compared to the same period last year, Emirates NBD’s monthly survey has found.

The seasonally adjusted Dubai economy tracker index registered at 56.5 in June, up from May’s seven-month low of 55. The latest reading was above the long-run series average (55.2).

In line with the trend observed during the previous three months, employment also rose during June, the report said.

However, the pace of job creation was “marginal overall”.

“An increase in payroll numbers across the wholesale and retail sector offset declines seen in the construction and travel and tourism sectors,” it stated.

Sector-wise, wholesale and retail was found to be the best performing category (index at 58), followed by construction (index at 57.4). The travel and tourism sector experienced the slowest improvement in business conditions (index at 54.4) .

The overall improvement in the private sector was mainly due to a sharp rise in business activity.

The rate of growth accelerated from May’s seven-month low, with anecdotal evidence attributing the rise to a combination of more projects, promotional activities and inflows of new business.

Inflows of new business continued to rise for the 16th consecutive month during June.

The rate of expansion was faster than May’s seven-month low, matching the trend seen for output. Survey respondents reported that the increase in new orders was supplemented by enhanced marketing and promotional discounting initiatives.

Meanwhile input price inflation also rose from May’s 14-month low to its fastest since March. All three monitored sub-sectors registered a rise in input costs, led by the wholesale and retail sector.

Despite increased inflationary pressures, Dubai’s private sector saw a renewed drop in output charges, following a fractional rise in May.

The only sector to buck the overall downward trend was the construction sector.

Firms in the wholesale and retail and travel and tourism sector reportedly offered discounts to attract customers due to intensive competitive conditions, the report said.

Khatija Haque, head of MENA Research at Emirates NBD, said: “The June Dubai economy tracker survey supports our view that Dubai’s economy has grown at a faster rate in H1 2017 compared with the same period last year.

“The wholesale and retail trade sector likely benefitted from increased household spending during Ramadan, which was in June this year, while the increased activity in the construction sector probably reflects progress on a number of infrastructure projects in Dubai.”

However, despite sharper improvements in the economy, business confidence towards the 12-month outlook slowed to the weakest since August 2016.

Firms expect greater marketing and sales efforts, combined with improvements in overall business conditions will lead to output growth in the coming 12 months, the report claimed.