Dubai's private sector, rebounding from July's 40-month low, recorded robust expansion in August with the rate of new business activity growing the fastest since March, the latest survey by Emirates NBD revealed on Wednesday.
However, despite stronger growth in activity and new orders, confidence towards the 12-month business outlook moderated for the second month in a row in August, while the rate of job creation was little-changed from July, according Emirates NBD Dubai Economy Tracker. "On the prices front, input cost inflation across Dubai's private sector strengthened to a six-month high, but selling prices declined slightly," the bank said in a report on latest monthly survey of business conditions in the Dubai non-oil private sector.
The survey, produced by Markit, provides an early indication of operating conditions in Dubai. The survey covers Dubai's non-oil private sector economy, with additional sector data published for travel & tourism, wholesale & retail and construction. All the three sectors were on an upswing in August, said the report.
Tim Fox, Chief Economist at Emirates NBD, said the rise in business activity in August is encouraging, and suggests that at least some of the slowdown over the previous two months was due to Ramadan.
"Business optimism about future growth remains high, but has moderated since the second quarter, with the sharp decline in oil prices since June likely weighing on sentiment. Year-to-date, the Dubai Economy Tracker suggests that the pace of growth in Dubai has been robust, although somewhat slower than in 2014, with the output index averaging 59.1 in January through August, compared with 62.1 over the same period last year," said Fox.The seasonally adjusted Emirates NBD Dubai Business Activity Index registered at 57.6 in August, up from July's recent low of 53.1, and above the neutral 50.0 value for the sixty-seventh month in a row. The latest reading pointed to the fastest expansion of output since May.
Stronger increases in output were recorded across all three key sub-sectors in August. The steepest rate of growth was seen at construction companies, followed by wholesale & retail firms, with rates of expansion quickening to three-month highs in both cases. While output growth also quickened across travel & tourism sector, the rate of increase was only modest overall. August data pointed to a sustained and strong upturn in Dubai private sector employment. The rate of growth was up only slightly from the previous month, however, and was slower than June's recent peak. Incoming new work and business activity expectations.
The bank said private sector companies operating in Dubai continued to discount their selling prices in August. "Though only moderate, the rate of reduction was one of the fastest seen in the current seven-month sequence of decline. Some firms commented that increased market competition had led them to discount their charges. In contrast, average input costs continued to increase across Dubai's private sector economy in August, indicating a further squeeze on operating margins. The rate of cost inflation was the fastest since February and solid overall," the bank said.
According to the HSBC UAE Purchasing Managers' Index, the UAE's non-oil private sector companies posted strong growth in August as new orders and output rose. Companies in the UAE buoyed by increased new business, hired additional workers.
The rate of job creation remained solid, and in line with the previous month, the survey report said. The month also saw output growth accelerating to 62.2 points from 61.6 points in July. New orders growth picked up to 66.4 points in August, the highest rate since November 2013. –End-
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