Improvement in business conditions sustained in August

Growth of Dubai’s non-oil private sector was sustained at a robust pace during August, supported by further gains in output, new orders and employment. 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, remained unchanged from July at 56.3 in August.

August data pointed to sharp growth across the three key sectors monitored by the survey. Wholesale and retail was the best performing category (index at 56.3), followed by construction (55.8) and travel and tourism (55.1).

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 and retail and construction.

Commenting on the Emirates NBD Dubai Economy Tracker, Khatija Haque, Head of MENA Research at Emirates NBD, said, "The Dubai Economy Tracker survey shows continued expansion of the economy last month, at a similar rate to June and July. Output and new orders have increased sharply, although this has not translated into significant jobs growth."

The overall improvement in the health of Dubai’s private sector reflected another sharp increase in business activity in August despite slowing slightly from the preceding month. The rise in output was attributed by respondents to improved demand conditions.

Continuing the trend seen in the latest six months, the pace of job creation was marginal. The upward trend was observed across all three monitored sub-sectors.

Inflows of new work rose for the eighteenth consecutive month during August. The rate of expansion was sharp and above the long-run average, but slower than the preceding month. Good quality products and promotional activities supported strong market demand, according to anecdotal evidence.

The level of business optimism was the strongest since May, but remained weaker than the long-run average. Promotional activities, new orders in the pipeline and further improvements in market demand conditions were the key factors cited by panellists behind business confidence.

Input prices rose for the eighteenth successive month during August. The rate of inflation accelerated from the prior month, but was weaker than the long-run average. Prices for raw materials reportedly rose due to stronger demand levels. Greater cost burdens were recorded across all three sub-sectors covered by the survey.

Output charges rose only the second time in 13 months during August. The rate of inflation was marginal overall. An increase in output prices in the travel and tourism sector offset the reductions seen in the construction and wholesale and retail sectors. Where an increase was registered firms linked this to the passing on of higher cost burdens to clients, while firms that reduced output prices associated this with intensive competitive conditions.

Source: Wam