Dubai’s non-oil private sector growth moderated in July

Dubai: Non-oil private sector economic activity in Dubai moderated in July as employment numbers remained broadly unchanged compared to June data, according to the Dubai Economic Tracker Index (DET) produced by IHS Markit, London-based global information provider.

The index is based on the latest data collected from a monthly survey of business conditions in the Dubai’s non-oil private sector. The survey provides an early indication of operating conditions in Dubai’s economy.

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

“Business activity in Dubai’s non-oil private sector economy continued to expand in July. That said, the rate of growth slowed since June, to the weakest since February,” the DET report said.

The seasonally adjusted IHS Markit Dubai Economy Tracker Index fell from 58.4 in June to 55.2 in July, the lowest since December 2018. The latest figure signalled a solid overall improvement in non-oil private sector business conditions in Dubai, and was broadly in line with its long-run trend level of 55.3.

“The start of the second half of 2019 saw Dubai’s non-oil economy lift off the accelerator. The headline Economy Tracker index signalled the softest rate of expansion of the year so far in July, following the strongest period of growth in over four years during the second quarter,” said Trevor Balchin, Economics Director at IHS Markit.

Employment was little-changed during the latest period, continuing a sequence of stagnant labour market conditions seen through the year so far. Companies also continued to cut their prices charged for goods and services, while input prices fell for the first time in over a year.

The overall slowdown in private sector activity in July mainly reflected the travel & tourism and construction sectors. The former posted a drop in its headline figure to 53.9, a seven-month low, while the figure for construction dropped to 53.8. Wholesale & retail, the third key sector monitored, bucked the overall trend with further marked growth (58.7).

Labour market conditions in the non-oil private sector of Dubai remained stagnant in July. The level of employment barely rose since June, continuing the overall trend shown during 2019 so far. Job creation in the wholesale & retail sector was offset by cuts to workforce numbers in travel & tourism and construction. The rate of expansion in new business in Dubai’s non-oil private sector economy eased further from May’s recent peak in July, and was only slightly stronger than the long-run trend pace since the series began in 2010.

Expectations for business activity over the next 12 months remained elevated at the start of the second half of 2019. The respective index was the third-highest on record. Sales forecasts in the wholesale & retail sector hit a new peak.

“Inflationary pressures weakened, with input and output prices falling concurrently in July for the first time since March 2018,” said Balchin.

Average input prices paid by private sector firms in Dubai’s non-oil private sector fell for the first time in 16 months in July. It was only the fourth time in over nine years where input prices have declined. Meanwhile, average prices charged for final goods and services fell for the fifteenth successive month in July, and at a faster rate than in June.