Emirates NBD Dubai Economy Tracker™
Sharp rise in activity in June, but employment stagnates
Dubai, July 9th 2019:
The non-oil private sector in Dubai continued to post a marked expansion of total business activity in June, with the rate of growth accelerating further to a new high since the survey began in 2010. On the other hand, rising output failed to generate higher employment, with staffing broadly unchanged since May. This continued the weak overall trend in the labour market seen over the past year-and-a-half.
The seasonally adjusted Emirates NBD Dubai Economy Tracker Index – a composite indicator designed to give an overview of operating conditions in the non-oil private sector – was little-changed from May’s 52-month high of 58.5, at 58.4 in June. The elevated level of the headline figure reflected further marked increases in total activity and new business, in contrast to a neutral contribution from employment.
Among the three key sectors monitored, the strongest overall performance was again registered in wholesale & retail (59.9), although growth slowed for the first time in 2019. The headline figure for tourism & recreation also eased since May (58.9), but to a smaller degree. In contrast, construction posted its best overall performance since last November (57.0).
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 & retail and construction.
Commenting on the Emirates NBD Dubai Economy Tracker, Khatija Haque, Head of MENA Research at Emirates NBD, said:
“There was little change in the June survey relative to May, but the data for Q2 2019 points to a sharp acceleration in Dubai’s economy in the second quarter of this year, with the average DET index reading at the highest level since Q1 2015. However, this growth in the volume of output has been on the back of continued price discounting and as a result is not translating into more jobs or higher salaries in the private sector. Nevertheless, the survey data so far this year supports our view that Dubai’s GDP growth is likely to be faster this year compared with 2017 and 2018.”
- Business activity increases at fastest pace since series began in 2010
- Employment broadly unchanged since May
- Prices charged for goods and services continue to fall, albeit only fractionally
Business activity and employment
The rate of growth in total non-oil private sector business activity in Dubai accelerated for the fifth time in the first six months of 2019, to the strongest since the series began in 2010. All three sectors monitored posted robust increases in activity, with the fastest overall expansion seen in travel & tourism.
In contrast, employment in the non-oil private sector was broadly unchanged in June (49.9) as companies again remained cautious with regard to new hiring. The Employment Index has trended at 50.0 since February 2018. Among the three key sectors for which data are published, staffing fell in tourism & recreation and construction, but rose in wholesale & retail.
Emirates NBD Dubai Economy Tracker Index™
Seasonally adjusted, 50 = no-change
Sources: Emirates NBD, IHS Markit
Incoming new work and business activity expectations
June data indicated another marked increase in new business in Dubai’s non-oil private sector economy. The rate of expansion eased from May’s recent peak, but remained among the strongest seen since the series began in 2010.
Expectations for business activity over the next 12 months were also elevated in June. The respective index was lower than in April and May, but higher than any previous period since its inception. Sales forecasts in the wholesale & retail sector hit a new record high.
Input costs and average prices charged
Price pressures weakened further at the midway point of 2019. Input price inflation slowed for the fourth month running to the weakest in the current 15-month sequence of inflation. Meanwhile, prices charged for goods and services fell for the fourteenth month running, albeit at the slowest rate since February. All three key sectors continued to engage in price discounting in June.
Emirates NBD Dubai Economy Tracker Index: Sector summary
Seasonally adjusted, 50 = no-change
Sources: Emirates NBD, IHS Markit.