Emirates NBD Dubai Economy Tracker: Output and new work rise sharply in March, but price discounting continues
Source: ASDA'A BCW for Emirates NBD , Author: Posted by BI-ME staff
Posted: Tue April 9, 2019 2:47 pm

UAE. Dubai’s non-oil private sector economy expanded at a faster rate in March. Total business activity (output) increased at the fastest rate since January 2015. Moreover, two of the three key monitored sectors – travel & tourism and wholesale & retail – posted series record increases in activity.

With new business growth also accelerating, expectations for the next 12 months were the second-strongest on record, just shy of January’s peak. Price discounting, particularly in the wholesale & retail sector, was likely a key driver of demand in March. 

The seasonally adjusted Emirates NBD Dubai Economy Tracker Index – a composite indicator designed to give an accurate overview of operating conditions in the non-oil private sector economy – rose from 55.8 in February to 57.6 in March, the highest since May 2018. It was also the joint-highest figure in nearly two years and above the long-run average for the series since 2010 (55.2).

Business conditions improved at stronger rates in travel & tourism and wholesale & retail. Travel & tourism saw its headline index reach a record high of 59.8, while the headline figure for wholesale & retail was 59.7, just shy of the peak set in October 2017 (60.0). In contrast, business conditions at construction firms were the softest in 28 months (51.8), as weaker new order growth weighed on the sector index.

A reading of below 50.0 indicates that the non-oil private sector economy is generally declining; above 50.0, that it is generally expanding. A reading of 50.0 signals no change.

The survey covers the Dubai non-oil private sector economy, with additional sector data published for travel & tourism, wholesale & retail and construction.

Commenting on the Emirates NBD Dubai Economy Tracker, Khatija Haque, Head of MENA Research at Emirates NBD, said: “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.  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.”

Key Findings
- Dubai Economy Tracker improves to ten-month high of 57.6
- Fastest expansion in business output since January 2015
- Output expectations second-highest on record

Business activity and employment 
Total non-oil private sector output increased at the fastest pace since January 2015. Moreover, the rate of expansion was the fifth-strongest on record since the series began in 2010. Of the three key sectors, travel & tourism posted the steepest growth.
Workforces were expanded to support activity levels in March, although the rate of job creation was modest. This partly reflected broadly no change in staffing in the travel & tourism sector.

Emirates NBD Dubai Economy Tracker Index™  
Seasonally adjusted, 50 = no-change

 Sources: Emirates NBD, IHS Markit

Incoming new work and business activity expectations
Inflows of new business to private sector non-oil firms in Dubai rose in March. Moreover, the rate of expansion was the fastest since May 2018. Travel & tourism posted the strongest growth among the three key sectors. Meanwhile, companies’ expectations for total activity over the next 12 months were the second-strongest on record in March.

Input costs and average prices charged
Average input prices rose for the twelfth month running in March. That said, the rate of inflation was modest and eased since February. Cost pressures were strongest in the travel & tourism sector.

Non-oil private sector firms in Dubai cut their prices charged for goods and services for the eleventh month running in March. This marked the longest sequence of discounting since the series began in 2010. The rate of price discounting was the steepest since December 2018.

Emirates NBD Dubai Economy Tracker Index: Sector summary
Seasonally adjusted, 50 = no-change

Sources: Emirates NBD, IHS Markit

Photo Caption: Khatija Haque, Head of MENA Research at Emirates NBD

About The Emirates NBD Dubai Economy Tracker™
The Emirates NBD Dubai Economy Tracker™, produced by IHS Markit, is based on data compiled from monthly replies to questionnaires sent to senior executives in approximately 600 private sector companies, which have been carefully selected to accurately represent the true structure of the Dubai economy, including manufacturing, services, construction and retail.

The panel is stratified by Standard Industrial Classification (SIC) group, based on industry contribution to GDP. Survey responses reflect the change, if any, in the current month compared to the previous month based on data collected mid-month.

For each of the indicators the ‘Economy Tracker report’ shows the ‘diffusion’ index. This index is the sum of the positive responses plus a half of those responding ‘the same’. Diffusion indexes have the properties of leading indicators and are convenient summary measures showing the prevailing direction of change. An index reading above 50 indicates an overall increase in that variable, below 50 an overall decrease. 

The Dubai Economy Tracker Index is a composite index based on five of the individual indexes with the following weights: New Orders - 0.3, Output - 0.25, Employment - 0.2, Suppliers’ Delivery Times - 0.15, Stock of Items Purchased - 0.1, with the Delivery Times index inverted so that it moves in a comparable direction. The Dubai Economy Tracker Index is comparable to the UAE Purchasing Managers’ Index.

IHS Markit do not revise underlying survey data after first publication, but seasonal adjustment factors may be revised from time to time as appropriate which will affect the seasonally adjusted data series.

About Emirates NBD
Emirates NBD is a leading banking Group in the region. As at 30th June 2018, total assets were AED 477.5 Billion, (equivalent to approx. USD 130 Billion). The Group has a significant retail banking franchise in the UAE and is a key participant in the global digital banking industry, with over 90 per cent of all financial transactions and requests conducted outside of its branches. The bank was declared the Most Innovative Financial Services Organization of the Year at the 2017 BAI Global Innovation Awards.

The bank currently has 227 branches and 1065 ATMs and SDMs in the UAE and overseas and a large social media following, being the only bank in the Middle East ranked among the top 20 in the ‘Power 100 Social Media Rankings’, compiled by The Financial Brand. It is a major player in the UAE corporate and retail banking arena and has strong Islamic Banking, Global Markets & Treasury, Investment Banking, Private Banking, Asset Management and Brokerage operations.

The Group has operations in the UAE, the Kingdom of Saudi Arabia, Egypt, India, Singapore, the United Kingdom and representative offices in China and Indonesia.
The Group is an active participant and supporter of the UAE’s main development and community initiatives, in close alignment with the UAE government’s strategies, including financial literacy and advocacy for inclusion of People with Disabilities under its #TogetherLimitless platform. Emirates NBD Group is an Official Premier Partner of Expo 2020 Dubai.

For more information, please visit: www.emiratesnbd.com

About IHS Markit (www.ihsmarkit.com
IHS Markit (Nasdaq: INFO) is a world leader in critical information, analytics and solutions for the major industries and markets that drive economies worldwide. The company delivers next-generation information, analytics and solutions to customers in business, finance and government, improving their operational efficiency and providing deep insights that lead to well-informed, confident decisions. IHS Markit has more than 50,000 business and government customers, including 80 percent of the Fortune Global 500 and the world’s leading financial institutions.



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