Retail, construction drive Dubai growth
dubai — Strong growth in wholesale and retail trade sectors as well as a robust upswing in the construction sector helped improve Dubai’s the non-oil private sector in June.
Amid a strong pipeline of new projects and work outstanding, overall business confidence in Dubai also accelerated to a high in June, according to a study by Emirates NBD.
Emirates NBD Dubai Economy Tracker Index shows wholesale and retail sector was the strongest performer in June (58.6), followed by construction (57.1) and travel and tourism (54.9).
“Although the headline index fell from May’s recent peak, reflecting easing travel and tourism growth momentum, stronger expansions were registered in both the wholesale and retail and construction sectors,” the bank said in the survey report.
The Emirates NBD Index fell to 56.0 in June, from 57.6 in May. “Despite the headline figure falling from that recorded in May, it remained at a level indicative of a marked expansion that was above the historical average,” said the report.
“Despite the decline in the headline Dubai Economy Tracker index in June, new work and output both increased at a sharp rate, reflecting strong demand,” said Khatija Haque, head of Mena Research at Emirates NBD.
The wholesale and retail trade sector performed particularly well last month, which may have been partly due to the Eid holidays.
“The sharp improvement in business conditions in the construction sector supports our view that infrastructure investment will be an important driver of economic growth this yea,” said Haque. A survey by Dubai’s Department of Economic Development, the second half of 2018 would be more promising as businesses expect an increase in trade volumes, growth in profits and revenues, as well as new contracts and orders.
“Rising prices of oil, improving economic prospects, increased international trade and investments in innovative sectors of the economy and the country’s infrastructure are the key factors boosting business confidence.” However, according to Emirates NBD survey, job creation remained muted in June amid cost cutting efforts while business activity growth softened from
New work and output both increased at a sharp rate, reflecting strong demand
Khatija Haque, Head of Mena Research, Emirates NBD
May’s 40-month high but the pace of expansion remained sharp overall. The latest improvement extended the current phase of rising output that began in March 2016. Firms commonly cited favourable business conditions and strong inflows of new work as reasons behind higher business activity, said the report. Job creation growth was fractional overall, matching that recorded in May. According to anecdotal evidence, some firms hired additional staff in anticipation of new project starts, although those that reduced payroll numbers to cut costs negated these.
According to the report, June data signalled a steep expansion in new work across Dubai’s non-oil private sector. “Although the rate of growth softened from that seen in May, it remained strong overall and above the long-run average.”
The report said business activity expectations improved to the highest since this index began in April 2012 in June. “Anecdotal evidence suggested that marketing initiatives, solid business conditions and a strong pipeline of new orders underpinned optimism.”