Non-oil private sector in slight retreat

TRAVEL & TOURISM REMAINED THE STRONGEST PERFORMER, FOLLOWED BY CONSTRUCTION

Dubai’s non-oil private sector growth slowed, April data showed, as the headline Dubai Economy Tracker Index (DET) eased from 55.3 in March to 53.9 in April. The new reading is well short of the January 2018 high of 56

Dubai’s non-oil private sector growth slowed, April data showed, as the headline Dubai Economy Tracker Index (DET) eased from 55.3 in March to 53.9 in April.

The new reading is well short of the January 2018 high of 56.

Both output, with a reading of 57.1, and new work (58) gained in April but at a slower rate than in previous months. In particular, the new work index was at its lowest since October 2016.

Weaker momentum in the wholesale and retail and travel and tourism sectors was a key factor behind the slowdown.

Despite easing since the preceding survey period, travel and tourism remained the strongest performer (55.3), followed by construction (54.9) and wholesale and retail (53.5).

“The softer Economy Tracker Index in April appears to reflect weaker inventory accumulation, as well as slower output and new work growth. However, demand still appears to be relatively robust,” said Khatija Haque, head of Mena Research at Emirates NBD.

Job creation

Despite easing output growth being registered in April, data showed a return to job creation for the first time since January.

That said, the rate of employment growth was only marginal overall. The employment index signalled a marginal increase in jobs last month, with the index at 50.3, up from 49.7 in March.

The majority of firms surveyed signalled no change in employmentl. Staff costs rose last month, contributing to sharply higher input costs overall. The input cost index rose to 54.3, the highest reading since January, when value-added tax (VAT) pushed the index up to 59.2. Selling prices were largely unchanged, however, with the output price index rising to 50.2 — only just above the neutral level, despite the much higher input price inflation.

Businesses were more optimistic despite the weaker new order growth and higher production costs faced by firms. More than half of all firms surveyed expected their output to be higher in 12 months’ time, while only 4.5 per cent expected a decline.

Construction sector activity accelerated, with the construction sector index rising from 53.2 in March to 54.9 in April,

The softer Economy Tracker Index in April appears to reflect weaker inventory accumulation, as well as slower output and new work growth. However, demand still appears to be relatively robust.” Khatija Haque | Head of Mena Research at Emirates NBD

its highest reading since January. Output and new work grew at the sharpest rate since the start of the year, and employment rose by the most since November 2015. The travel and tourism sector index declined to a four-month low of 55.3 on the back of softer output and new work growth.

Encouragingly, employment increased modestly on average after two months of decline in the sector. Firms absorbed higher input costs as selling prices declined marginally for the second month in a row.

Wholesale and retail trade sector momentum slowed.

Weaker output and slower new order growth were the main drivers behind the minus 2.8 point decline in the wholesale and retail trade index in April.