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14 April 2024

Emirates NBD Dubai Economy Tracker: Sharp growth maintained in Dubai’s private sector


February data signalled a further strong improvement in business conditions across Dubai’s non-oil private sector. Greater overall business activity remained a key driver of growth momentum, whilst an uptick in new work was also registered.

The seasonally adjusted Emirates NBD Dubai Economy Tracker Index – a composite indicator designed to give an accurate overview of operating conditions in the non-oil private sector economy – was at 55.8 in February, little-changed from 56.0 in January. Improvements in operating conditions have now been recorded in every month for the past two years.

The best performing sub-sector monitored by the survey was the wholesale & retail sector (57.3), closely followed by the travel & tourism sector (57.2) and the construction sector (53.9).

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, "The PMI survey data for February continued to show solid growth in Dubai’s economy, with the travel and tourism sector performing particularly well after a relatively soft Q4 2017. Overall we expect Dubai’s economy to grow at a slightly faster rate this year, underpinned by infrastructure investment and government spending."

A strong and robust expansion in business activity was a key factor behind the latest improvement in operating conditions in Dubai’s non-oil private sector. The rate of growth was sharp overall, despite softening fractionally since the preceding survey.

Following moderate job creation at the beginning of 2018, no-change was reported in employment levels during February. The finding thereby ended an eleven-month streak of rising payroll numbers. Job shedding was registered in the travel & tourism and construction sectors, whilst growth was seen among wholesale & retail firms.

Inflows of new business accelerated at the fastest pace since August last year during the latest survey. Furthermore, the rate of growth was sharp overall, with the steepest rise in new work seen in the travel & tourism sector. Many firms noted strong demand from both domestic and foreign sources.

Optimism towards future growth prospects remained strongly positive, despite softening since January. New project wins and an expected economic upturn underpinned business confidence during February, according to anecdotal evidence.

Non-oil private sector firms operating in Dubai reported easing input cost inflation during February. Nonetheless, the pace of inflation remained marked overall and was led by the wholesale & retail sector. Rising average cost burdens have now been registered for 24 months in a row.

Output charge inflation softened during the latest survey period. The rate of inflation was only slight overall, albeit above the series’ long-run average. The finding thereby extended the current sequence of rising selling prices to three months.