Dubai construction industry records strongest rise in business activity

Private sector firms in Dubai are highly optimistic regarding the 12-month business outlook.

Dubai's private sector firms continued to experience robust growth in September and the construction sector posted the strongest rise in business activity.
This was revealed on Sunday in a survey, which was produced by Markit and sponsored by Emirates NBD.
Last month, data signalled a sustained upturn in output levels within Dubai's private sector economy, helped by growth across all three key sub-categories of activity monitored by the survey.
Overall rates of business activity and new orders growth were softer than those seen on average through the first half of 2015. As a result, private sector companies were more cautious in terms of their staff hiring in September, with the latest expansion of employment numbers the slowest for three-and-a-half years.
Meanwhile, inflationary pressures continued to moderate, with input costs rising at the slowest pace since May and average prices charged were broadly unchanged over the month.
The Emirates NBD Dubai Business Activity Index posted 56 in September to remain well above the neutral 50 threshold. Although the index dipped from 57.6 in August, the latest reading signalled a much faster rate of output expansion than July's 40-month low.
"The slight slowdown in the pace of expansion in Dubai's non-oil economy is consistent with the slowdown across the UAE in September," said Tim Fox, chief economist at Emirates NBD.
Fox added: "Overall, the pace of activity remains robust however, particularly in the construction sector. The travel and tourism remains the softest out of the three sectors surveyed, although optimism remains high, and we expect activity to recover as we head into the fourth quarter of 2015." Of the three key sectors monitored by the survey, construction companies signalled the strongest rise in business activity and the rate of growth accelerated to a four-month high.

Wholesale and retail firms also outperformed the all-sector trend in September, with business activity rising at the steepest pace since April. In contrast, latest data indicated only a moderate increase in business activity across the travel and tourism sector.
New work
Volumes of new work increased at a strong pace in September, with the latest increase only slightly less marked than the five-month high recorded during August. Anecdotal evidence cited rising spending among clients and successful marketing initiatives. In some cases, survey respondents noted that price discounting strategies had been required to attract new work.
Dubai private sector firms are highly optimistic regarding the 12-month business outlook, although the degree of positive sentiment remained slightly weaker than seen on average during the first half of 2015.
Travel and tourism companies indicated the most upbeat projections for growth over the year ahead, underpinned by hopes of more supportive economic conditions across the region.
Meanwhile, business confidence across the construction sector also exceeded the Dubai whole economy average in September, with some respondents pointing to development work ahead of Expo 2020.
Input costs
Average cost burdens increased at only a modest pace across the Dubai private sector, reflecting relatively subdued raw material price rises and softer salary pressures in September.
The overall rate of input price inflation eased to its lowest for four months. At the same time, average prices charged by private sector companies were broadly unchanged since August.
By sector, rising average prices charged by travel and tourism companies contrasted with continued price discounting by construction firms.
- abdulbasit@khaleejtimes.com 

• Dubai