Dubai’s non-oil private sector marks sharp growth in June

The non-oil private sector business activity within the emirate of Dubai expanded in June, accelerating at the highest pace since 2010, according to a recent survey sponsored by Emirates NBD and produced by IHS Markit.

However, employment level remained flat at 49.9 as compared to May amid rising output, which carried on the overall weak trend in the labour market seen over the past year-and-a-half period.

The seasonally adjusted Emirates NBD Dubai Economy Tracker Index inched down to 58.4 in June from 58.5 in May, marking growth in total activity and new business.

Despite the marginal decrease in the new business of Dubai’s non-oil private sector economy last month, as compared to May, it remained among the strongest rates since the series began in 2010.

Growth in the wholesale and retail sector’s business conditions slowed for the first time this year at 59.9, while the headline figure for tourism and recreation contracted to 58.9 since May.

On the other hand, construction business marked its best overall performance at 57.0 since last November, the survey revealed.

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,” Haque added.

At the level of staffing among the three key sectors, tourism and recreation and construction witnessed a decline in hiring, while it rose in wholesale and retail.

Business activity expectations were upgraded in June for the next 12 months, with sales in the wholesale and retail sector expected to hit a new record high, the survey showed.

“Nevertheless, the survey data so far this year supports our view that Dubai’s gross domestic product (GDP) growth is likely to be faster this year compared with 2017 and 2018,” Haque noted.

Meanwhile, price pressures eased last month, with input price inflation slowing for the consecutive fourth month running to the weakest in the current 15-month sequence of inflation, the survey unveiled.

Furthermore, prices charged for goods and services dropped for the fourteenth month in a row in June at the slowest rate since February as the three key sectors maintained offering price discounts.