The Economy Tracker Index for Dubai (DET) for the month of February has revealed a great improvement throughout the non-oil private sector of Dubai for business conditions.
Although the headline index slightly eased to 55.8 in February from a 56 in January, this still indicates a significant growth in the non-oil private sector.
Khatija Haque, (Head of Mena Research at Emirates NBD.) has stated, "The PMI survey data for February continued to show solid growth in Dubai’s economy, with the travel and tourism sector performing particularly well after a relatively soft Q4 2017. Overall we expect Dubai’s economy to grow at a slightly faster rate this year, underpinned by infrastructure investment and government spending".
Both business activity and new orders posted readings of more than sixty, which signals an extremely vast growth in these aspects of the survey. However, there was no change in employment levels throughout January as many firms were continuing to digest the rising costs of input. Even though there was an ease in the rate of increase in input costs during February, firms continued to display significantly greater costs last month.
Prices only marginally increased on average. We saw the slow of inventory accumulation during February, as many firms had shored up the required inventories in the month of December when VAT had not come into force as of yet. Overall, business optimism showed a slight decrease in February; however, firms continued to remain optimistic in general.
The sector surveys indicated a quick rebound within the sector of tourism after a lacklustre fourth quarter of 2017. The travel & tourism index showcased their highest reading in thirteen months. The retail and wholesale trade sector also showed a strong performance across February, whilst there showed a minor loss of momentum last month within the sector of construction.
New work and output work has risen at a quick rate in the month of February and input costs begin to moderate after a surge in January (this was a result due to VAT introduction). After five months of discounting prices, for firms within the industry of travel and tourism it was finally possible to increase their sale prices in February marginally.
Data has reflected that retail and wholesale trade sectors have seen quicker growth in February with the sector index increasing to a 3-month high of 57.3. This indicates a strong growth rate within the sector. Both new orders and output growth were strong. Although, job growth was small with the employment index down from 51.9 in January to 50.4. However, in encouraging news, the sale prices increased for the fourth month consecutively which reflects that those firms within the sector continue to retain pricing power.
After a solid start to 2019, growth within the area of construction slowed down in February. The overall sector index reduced to 53.9 which was largely due to a decline within employment in construction and softer new orders growth. Overall, output increased rapidly in February, though this was at a relatively lesser rate than seen in January. Despite this, optimism within the sector continues to stay high.
Haque stated, "We expect construction sector activity this year to be underpinned by increased infrastructure and development spending, as Dubai gears up for Expo 2020".