Private sector business in Dubai showed further strong increases in activity and new orders in June, despite rates of expansion moderating during the month.
Emirates NBD Dubai Economy Tracker showed that private sector companies were increasingly optimistic for the second half of 2015, with the degree of positive sentiment reaching a 19-month high.
“The key point to note is that yes the momentum in terms of growth has slowed, [but] we’re not overly surprised because even though this is a seasonally adjusted index, it’s very difficult to remove all of the seasonal effects, particularly when the Islamic calendar doesn’t coincide exactly with the Gregorian one. So every year the seasonality moves around a bit,” said Khatija Haque, head of MENA Research at Emirates NBD.
“We’re not too concerned by the slowdown as we head into the summer months. We would expect the next one or two surveys to remain on the softer side as well,” she added.
Haque said that the pace of growth in Dubai’s economy outstripped the other emirates in the UAE.
“Dubai’s economy is still growing at a very solid pace. The overall output index was stood at 55.5, which is very strongly above the neutral 50 level. It does signal a robust pace of growth and it’s higher than the overall UAE PMI reading, which we got last week, and it suggests that the activity and momentum of growth in Dubai is a little bit faster than the whole UAE,” she said.
“The other key point from the June survey is that the expectations or the optimism that was evident across all of the sectors was very sharply higher. Businesses seemed to be very upbeat about the prospects on a 12-month view and that’s something that provides us with a little bit of comfort in terms of how things might develop in the coming months,” Haque added.
She said the survey included focused on the construction, travel and tourism, wholesale and retail trade sectors, with construction showing notable growth during the last month, while tourism and travel also showed positive signs during what’s normally quieter period for the industry.
“We continue to see the construction sector, in particular, growing at a faster pace than either wholesale and retail trade or travel and tourism,” she said.
“What was interesting, and little bit counter-intuitive because we’re heading into what’s usually a low season the hospitality sector, but the travel and tourism survey show that output and activity actually accelerated in June for that sector. It’s possible that there was some price discounting, perhaps and special marketing packages that were offered to key markets to try and encourage people to come over the low season. But when we look at the actual output and activity in the sector, it does seem to have picked up in June based on the survey,” Haque added.
Retail and wholesale, while slowing somewhat during the month, was still showing healthy signs of growth.
“In the wholesale and retail sector, we saw a slightly slower momentum in terms of growth, but again activity index was at 54.9, which is quite healthily above the neutral 50 level. It suggests growth is there, but perhaps a little slower than it was in May. Given that Ramadan tends to be less of a time for shopping, I don’t think it’s particularly surprising that the malls and shops are little bit quieter than they might be,” she said. Arabian Business