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Dubai's non-oil growth slows in October

dubai - Travel and tourism was the weakest performing sector in October

Non-oil sector growth and job creation in Dubai slowed in October month on month, with travel and tourism emerging the weakest performing sector, according to Emirates NBD's monthly Dubai Economy Tracker Index.

With non-oil sector growth weakening to a 31-month low, the index fell from 54.4 in September to 52.5. Nonetheless, it remained above the critical 50.0 mark in October, thereby stretching the current phase of expansion to 32 months.

Contrary to the general trend, the construction sector saw a stronger expansion in the latest survey. Travel and tourism was the weakest performing sector in October at 49.6, followed by wholesale and retail (53.7) and construction (55.5).

A reading of below 50.0 reflects decline; above 50.0 shows expansion and a reading of 50.0 signals no change.

Khatija Haque, head of Mena research at Emirates NBD, said while still in expansion territory, the headline index points to the slowest rate of growth in the private sector in more than two-and-half years. The travel and tourism sector contracted marginally last month.

"Both output and new orders across the whole of Dubai's private sector increased in October, but at markedly slower rates. Output growth was the weakest year to date, while new order growth was the slowest since April 2016," Haque said.

"The employment index remained in contraction territory for the second month in a row as more firms reported a decline in headcount than those reporting an increase. However, the vast majority of firms surveyed reported no change in job numbers in October."

According to the Institute of International Finance (IIF), real GDP growth in Dubai may pick up slightly from 2.8 per cent in 2018 to 3 per cent in 2019. It warned that a slower global economy could also adversely impact the tourism, retail and hospitality sectors.

Haque noted that margin pressures intensified last month, as input costs rose at a slightly faster rate than in September, while output (selling) prices declined on average. Stocks of inventories also declined last month, the first time this has happened since February 2016.

"Despite the soft survey data, firms in Dubai were the most optimistic than they have been since at least 2012, with nearly 77 per cent of respondents expecting their output to be higher in a year's time," she added.

- waheedabbas@khaleejtimes.com