DUBAI: Dubai’s non-oil private sector economy gathered momentum in March, with total business output increasing at the fastest rate since January 2015, while the tourism and retail industries posted record upticks in activity, according to Emirates NBD.
The Dubai-based lender’s seasonally adjusted Dubai Economy Tracker Index – a composite indicator developed with IHS Markit and designed to give an accurate overview of operating conditions in the non-oil private sector economy – rose to 57.6 in March, the highest since May 2018, from 55.8 in February, report agencies.A number above 50 indicates expansion, and below 50 signals contraction.
The March figure was also the joint-highest in nearly two years and above the long-run average of 55.2 for the series since 2010, the bank noted.
The improvement in non-oil business activity was led by the travel and tourism industry – which reached a record high of 59.8, and wholesale and retail, which stood at 59.7, just shy of the last record set in October 2017.
However, business conditions within the construction industry were the weakest in 28 months due to a softening in new order growth, Emirates NBD said.
A strong uptick in business output drove the main index performance in March, the lender said. The non-oil private sector's rate of expansion was the fifth-strongest on record since 2010.
This translated into higher levels of business confidence, with firms’ output expectations the second-highest on record after the peak in January.Price discounting – especially in the retail sector – was the likely key driver of demand in March. Non-oil private sector firms in Dubai cut their prices for goods and services for the 11th month running, marking the longest sequence of discounting since the series began in 2010. The rate of price discounting was the steepest since December 2018.
“While the rebound in the headline Dubai Economy Tracker Index is encouraging, it is clear that firms continue to price discount in order to secure new work and boost activity,” said Khatija Haque, head of Mena research at Emirates NBD.
“The pressure to cut costs means that the recovery in the volume of activity has not translated into much job growth in the private sector.”
The rate of job creation was modest last month, partially reflecting little or no change in staffing in the travel and tourism sector especially, the tracker showed.
Meanwhile, average input prices rose for the 12th month running in March, while the rate of inflation was modest and has eased since February.