Dubai non-oil private sector growth slowed in December
(1/11/2018 6:19:00 AM)
Data on Dubai’s non-oil private sector December showed a marginal slowdown in growth with the Emirates NBD Dubai Economy Tracker Index (DETI) slipping to 54.7 in December, from 55.3 in November — the lowest reading since October 2016.
Data indicated a slower rate of expansion in Dubai’s economy last month. The main culprit was slower output/ activity growth in December (56.1 down from 59.5 in November), as new orders remained strong at 59.1.
By sector, wholesale & retail (index at 54.9) was the best performing category, closely followed by construction (index at 53.5). The travel & tourism sector (51.2) experienced the slowest improvement in business conditions.
“The decline in the Dubai Economy Tracker index in December is a little surprising, but appears to be broad-based across all the key sectors. Nevertheless, a reading of 54.7 still indicates economic growth in December. Looking at 2017 as a whole, the survey data suggests that Dubai’s economy grew at a faster rate than both 2015 and 2016,” said Khatija Haque, Head of MENA Research at Emirates NBD.
Employment eased further to 50.4, close to the ‘no change’ level. Margin pressures eased slightly in December, as input cost inflation slowed and firms were able to increase selling prices marginally.
Firms were slightly more optimistic in December compared with November, citing an expected economic upturn and incoming new projects in the survey. Inventories also increased at a solid rate in December.
Despite the marginal slowdown in December the annual data looks more encouraging. The headline DETI averaged 56 last year, sharply higher than the 53.7 recorded in 2016 and also better than 2015 when the index averaged 54.7.
“The survey indicates that Dubai’s economic growth probably accelerated last year, which is in line with our forecast. If we look at the components of the survey, there are some key trends worth highlighting. Both business activity/ output and new work averaged above 60 in 2017, the highest annual average for these sub-indices on record (since 2010). Employment growth was the slowest in the survey history in 2017, so the increased volume of economic activity did not translate into similar growth in jobs in the private sector,” Haque said.
Input costs have been relatively subdued, and firms still have little pricing power. Selling prices declined on average for the third consecutive year in 2017.
After posting a record high in October, the wholesale & retail sector index eased to 54.9 in December. Output growth slowed sharply in the sector last month, with this index declining to 54.2 from readings above 60 in September, October and November.
Construction sector output softened to a 13-month low in December After several months of exceptionally strong output growth in the construction sector, the output index eased to a still-high 56.5.in December. New work growth also slowed last month but remains firm with the index at 55.3. Despite input cost inflation easing compared with November’s reading, average cost burdens continued to increase at a marked pace overall in December.
Travel & tourism sector index at lowest level since February 2016 The headline travel & tourism sector index declined to 51.2 in December from 52 in November, the lowest reading in 22 months. While the survey still shows expansion in the sector, the growth momentum has slowed over the last four months compared with earlier 2017.