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Dubai businesses upbeat despite slowdown in July

Dubai - Emirates NBD data shows that in July growth momentum moderated to its weakest recorded since March 2012.

The overall business activity across Dubai's private sector economy, which has been on a continuous expansion for five-and-a-half years, recorded yet another month of growth but on a slower pace in July, Emirates NBD data released on Monday shows.
The bank's Dubai Economy Tracker shows that in July growth momentum moderated to its weakest recorded since March 2012 amid softer contributions from all three key sub-sectors monitored by the survey.
But despite this slowdown, business optimism remained strong and solid pace of job creation continued in July, the report said.
"Private sector companies operating in Dubai are nonetheless still highly upbeat about their business activity prospects for the year ahead," it said. "This in turn contributed to another rise in employment numbers in July."

The survey results come amid a bullish forecast by the International Monetary Fund suggesting that  $13 billion will be added to the UAE's economy with the end of sanctions on Iran, as trade between the two countries steps up between now and 2018.
That is equivalent to a one per cent gain in real GDP growth each year over the next three years, the IMF said in its annual report on the country's economy. Iran accounted for 12 per cent of the UAE's non-oil exports, valued at $12 billion in 2013. Most of this came in the form of re-exports traded through Dubai's Jebel Ali Port.
The Emirates NBD survey, produced by Markit, suggests that pressure on margins persisted, as input costs increased over the month and average prices charged declined marginally across the private sector.
The survey provides an early indication of operating conditions in Dubai. The survey covers the emirate's non-oil private sector economy, with additional sector data published for travel and tourism, wholesale and retail and construction.
Tim Fox, chief economist at Emirates NBD, said the softening in activity in July is in line with other anecdotal reports, and probably reflects the impact that a stronger dirham and lower oil prices may be having on private sector output and sentiment.
"Nonetheless at 53.1, the headline number still suggests relatively firm growth in the non-oil economy, and it is especially encouraging that despite the slowdown, firms in all three surveyed sectors remain extremely upbeat about future business activity," he said.
At 53.1 in July, the seasonally-adjusted Emirates NBD Dubai Business Activity Index posted above the 50.0 no-change value, as has been the case in each month since February 2010.
However, the latest reading was down from 55.5 in June, to signal that output growth was the slowest recorded for just under three-and-a-half years and only moderate overall.
According to the report, construction remained the best performing broad area of activity in July, while travel and tourism and wholesale and retail saw only marginal rises in business activity.
"Staff numbers rose across the Dubai private sector as a whole in July, which continued the upward trend seen in each month since January 2012. Although the rate of job creation eased since June, the latest expansion was still the second fastest seen over the past five months Incoming new work and business activity expectations," said the report.
July data highlighted a solid upturn in new work received by Dubai private sector companies, led by strong growth in construction and wholesale and retail sectors. That said, the overall pace of new business expansion moderated over the month to its least marked since December 2010, said the report.
"Private sector companies in Dubai retain a strong degree of positive sentiment towards the outlook for business activity over the year ahead, despite the level of confidence moderating from June's 19-month high," it said.
Some survey respondents commented on more cautious spending patterns among clients, although there were also reports that competitive pricing strategies and new marketing initiatives had helped to support new business volumes.
- issacjohn@khaleejtimes.com