Dubai’s pri­vate sec­tor posts slow­est growth in Jan­uary

The Pak Banker - - BUSINESS -

The Emi­rates NBD Dubai Econ­omy Tracker In­dex in Jan­uary 2016 has de­clined to 50.7 down from 51.8 in De­cem­ber 2015.

Al­though still above the 50.0 nochange mark, the lat­est read­ing -a com­pos­ite in­di­ca­tor de­signed to give an ac­cu­rate overview of op­er­at­ing con­di­tions in the non-oil pri­vate sec­tor econ­omy - pointed to the weak­est over­all ex­pan­sion since Fe­bru­ary 2010.

By sec­tor, whole­sale and retail was the best per­form­ing cat­e­gory, with over­all busi­ness con­di­tions im­prov­ing at a slightly faster pace than in De­cem­ber. Mean­while, con­struc­tion com­pa­nies ex­pe­ri­enced a de­te­ri­o­ra­tion in op­er­at­ing con­di­tions for the first time since this in­dex be­gan in March 2015.

The head­line Emi­rates NBD Dubai Econ­omy Tracker In­dex is de­rived from in­di­vid­ual dif­fu­sion indices which mea­sure changes in out­put, new or­ders, em­ploy­ment, sup­pli­ers' de­liv­ery times and stocks of pur­chased goods.

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.

Khatija Haque, head of Mena Re­search at Emi­rates NBD, said: "The Dubai Econ­omy Tracker sur­vey shows the ser­vices sec­tors con­tin­u­ing to face chal­leng­ing mar­ket con­di­tions at the start of this year, while con­struc­tion sec­tor ac­tiv­ity has also slowed sharply. Weak ex­ter­nal de­mand was ev­i­dent in the main UAE Pur­chas­ing Man­agers In­dex sur­vey for Jan­uary, and this likely weighed par­tic­u­larly heav­ily on Dubai's open, ex­port ori­ented econ­omy."

Pri­vate sec­tor busi­ness ac­tiv­ity in­creased at a mod­est pace in Jan­uary, but the lat­est rise was the weak­est for three months. The whole­sale and retail sec­tor bucked the weaker over­all trends seen at the start of 2016, with some firms not­ing an usu­ally large boost to busi­ness ac­tiv­ity from the Dubai Shop­ping Fes­ti­val 2016. Con­struc­tion firms, how­ever, ex­pe­ri­enced an out­right fall in out­put lev­els, which some linked to de­lays to new projects amid weaker con­fi­dence among clients. Em­ploy­ment lev­els in­creased slightly in Jan­uary, but the rate of job cre­ation re­mained weaker than the long-run sur- vey av­er­age. Some firms sug­gested that the un­cer­tain eco­nomic out­look had weighed on staff re­cruit­ment.

To­tal new or­ders placed at Dubai pri­vate sec­tor com­pa­nies in­creased only mod­er­ately in Jan­uary, and the rate of ex­pan­sion eased to the weak­est for al­most six years.

Sur­vey re­spon­dents sug­gested that fall­ing oil prices and global eco­nomic un­cer­tainty had led to sub­dued con­fi­dence among clients, in turn act­ing as a brake on new busi­ness growth. Con­struc­tion com­pa­nies recorded an out­right fall in new work, while only the whole­sale and retail sec­tor recorded a faster up­turn in in­com­ing new busi­ness. Look­ing ahead, pri­vate sec­tor firms re­main pos­i­tive about the 12-month busi­ness out­look, but the de­gree of con­fi­dence was up only slightly from De­cem­ber's sur­vey-record low.

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