Travel leads Dubai business growth

The Dubai Economy Tracker signals a faster rate of expansion for non-oil firms in November, and this seems to have been led by the travel and tourism sector. - File photo

Private sector companies in Dubai reported another solid improvement in business conditions during November.
Moreover, the latest survey highlighted a recovery in growth momentum from the six-month low recorded in October.
At 55.2 in November, up from 53.2 in the previous month, the seasonally adjusted Emirates NBD Dubai Economy Tracker Index signalled the strongest improvement in business conditions since August. As a result, the index signalled that overall growth was broadly in line with the average since the survey began at the start of 2010 (55.1).
November data pointed to a mixed picture across the three key sectors monitored by the survey. Travel and tourism was the best performing area (57.5), followed by wholesale and retail (56.1), while construction companies reported only a modest upturn in overall business conditions (51.8).
The headline Emirates NBD Dubai Economy Tracker Index is derived from individual diffusion indices which measure changes in output, new orders, employment, suppliers' delivery times and stocks of purchased goods.
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 and tourism, wholesale and retail and construction. Commenting on the Emirates NBD Dubai Economy Tracker, Khatija Haque, Head of Mena Research at Emirates NBD, said: "The Dubai Economy Tracker signals a faster rate of expansion for non-oil firms in Dubai in November, and this seems to have been led by the travel and tourism sector. The introduction of visas-on-arrival for Chinese nationals (announced in September) may have contributed to the growth in this sector over the last couple of months."
The rebound in the headline index was supported by a sharp and accelerated expansion of private sector output in November. Survey respondents commented on stronger consumer demand in particular, alongside new product launches and successful price discounting strategies. However, the construction sector bucked the overall trend in November, with output growth slipping to a five-month low amid reports citing subdued investment spending among clients.
Employment levels increased slightly in November, but the rate of job creation remained weak in comparison to the trends seen prior to mid-2015. Sector data indicated a return to jobs growth in travel and tourism and wholesale and retail, but construction companies reported a drop in staffing levels for the first time since June. Stronger new business volumes were the main driver of the upturn in business conditions during November, with all three key sub-sectors reporting faster sales growth. Anecdotal evidence suggested that an improving economic backdrop and greater confidence among clients had underpinned the rise in new work. Looking ahead, private sector companies in Dubai are optimistic about their growth prospects for the year ahead, particularly travel and tourism companies. A number of firms cited projects related to Expo 2020, alongside hopes of a general upturn in economic conditions across the region.
November data signalled that input price inflation edged up to its strongest for five months, led by the steepest rise in construction sector costs since August 2015. Despite widespread reports citing higher raw material prices, private sector companies continued to lower their average charges in November. Price discounting has now been recorded for four months running, linked to competitive pressures and efforts to secure new work.
- business@khaleejtimes.com