Dubai non-oil economy grows, employment crashes in February
The non-oil private sector economy in Dubai remained strong in February, continuing on its strong performance in January 2019. However, despite business activity rising at the fastest pace in 9 months, the employment rate hit its lowest in 9 years in Dubai, according to the latest data released by Emirates NBD.
The Emirates NBD Dubai Economy Tracker Index produced by IHS Markit, which is a seasonally-adjusted composite indicator designed to give an overview of operating conditions in the non-oil private sector economy, showed that the Dubai economy sustained January’s seven-month high of 55.8 in February. A reading of above 50.0 on this index generally means that the economy is expanding – and, thus, a reading of 55.8 in February demonstrates a strong improvement in business conditions. Yet, employment data shows that the job sector has taken a beating.
“The growth in the volume of output and new work has been underpinned by continued price discounting, particularly in the wholesale and retail trade sector. Firms’ margins continue to be squeezed as selling prices have declined on average for the last 10 months, while input costs have increased over the same period. As a result, rising new orders have not translated into increased hiring and job growth in the private sector,” said Khatija Haque, head of MENA research at Emirates NBD.
Sectors performing well
The wholesale and retail sector showed the strongest growth, with its index growing to an eight-month high of 58.1. Companies in the sector reported the strongest volume growth in February in spite of higher price discounting since January, according to the Emirates NBD study.
The travel and tourism industry index also rose to a nine-month high of 56.8, while the construction sector showcased strong performance growth to 54.0 in February.
While new businesses increased at a pace that remains above the 2018 average, the growth rate has eased since January 2019. New businesses in the travel and tourism sector, however, have increased at a near-record pace in February.
Emirates NBD Dubai Economy Tracker Index: Sector summary