Dubai’s non-oil private sector activity in June continued to surge with both output and new orders increasing at a sharp rate, indicating strong demand across the three key sectors such as travel and tourism, wholesale and retail and construction.
The headline Dubai Economy Tracker Index (DET) eased to 56 in June from 57.6 in May. The average DET reading for the first half of 2018 was 55.8, lower than for the same period last year, indicating a slightly slower rate of expansion so far this year.
The decline in headline index from May’s peak was largely driven by easing travel and tourism growth momentum, however, stronger expansions were registered in both the wholesale and retail and construction sectors.
“Despite the decline in the headline DET index in June, new work and output both increased at a sharp rate, reflecting strong demand. The wholesale and retail trade sector performed particularly well last month, which may have been partly due to the Eid holidays. The sharp improvement in business conditions in the construction sector supports our view that infrastructure investment will be an important driver of economic growth this year,” said Khatija Haque, Head of MENA Research at Emirates NBD.
According to the Emirates NBD DET report, employment in June was broadly unchanged (50.2), despite the strong growth in output and new work over the last two months. Average cost burdens increased at a slower rate in the latest survey period. Output charges dropped in June amid promotional efforts across the non-oil private sector. The degree of price discounting was marginal overall, however.
“Input costs inflation eased in June, but looking at the first half of the year in total, producer inflation was higher than in the first half 2017, with most of the increase likely due to VAT. These higher costs have not been fully passed through to consumers. In June, selling prices were marginally lower on average, and this was the trend over the first half of 2018 as well,” the report said.
Businesses remained highly optimistic about their future order growth in June, with the business optimism index rising to 86.1 in June, the highest reading on record. Firms cited “solid business conditions”, marketing initiatives and a “strong pipeline of new work” as reasons for optimism.
The sector surveys showed improvement in business conditions in the construction sector in June, while momentum in the travel & tourism sector slowed. Activity in the wholesale and retail trade remained strong on sharp price discounting.
Construction sector sees faster growth in June The construction sector index rose to 57.1 in June from 54.6 in June, reflecting stronger growth in output and new work last month. Employment in the sector increased as well at a similar rate to May. Input costs were broadly unchanged from May, providing some relief for businesses.
Wholesale and retail trade sector activity was supported by price discounting. The headline index for the sector rose slightly to 58.6 in June, the highest reading since October 2017, signalling a strong rate of expansion.
Travel and tourism travel and tourism sector index declined to 54.9 in June, the lowest reading since December 2017. While output and new work did rise sharply last month, the headline index was weighed down by a decline in employment in the sector.
Source: Gulf News