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Dubai Economy Tracker signals slowest growth since March ’16

This report contains the latest release of data collected from a monthly survey of business conditions in the Dubai non-oil private sector. Sponsored by Emirates NBD and produced by IHS Markit, the survey provides an early indication of operating conditions in Dubai.


Whilst the latest data signaled an improvement in the health of Dubai’s non-oil private sector, the rate of growth weakened to a 31-month low. Slower improvements in activity, new work and another contraction in employment contributed to the slowdown. Contrary to the general trend, the construction sector saw a stronger expansion in the latest survey.

The seasonally adjusted Emirates NBD Dubai Economy Tracker Index – a composite indicator designed to give an accurate overview of operating conditions in the non-oil private sector economy – posted at 52.5, down from 54.4 in September, and the weakest figure since March 2016. Nonetheless, it remained above the critical 50.0 mark in October, thereby stretching the current phase of expansion to 32 months.

Travel & tourism was the weakest performing sector in October at 49.6, followed by wholesale & retail (53.7) and construction (55.5).

Read UAE PMI: Economy expands at a steady rate in October

Business activity and employment

Output across the non-oil private sector increased at the slowest rate since December 2017. The expansion was below the historical average. The travel & tourism sector saw the weakest improvement during the latest survey period.

October data signaled a modest fall in employment in Dubai’s non-oil private sector. The rate of contraction matched the record pace recorded in the preceding survey. Some firms cited cost-cutting as a reason behind job shedding.

Incoming new work and business activity expectations

Businesses reported a further increase in incoming new work during October, thereby extending the current phase of growth to 32 months. That said, the latest expansion was the weakest in two-and-a-half years. Whilst the increase was solid overall, it scored well below the historical average amid reports of slowing client demand growth in the non-oil private sector.

Despite the slowdown in output and new business, future growth prospects rose to a record high since this index began in 2012. Firms expressed optimism towards new project wins and developments surrounding Expo 2020.

Read Islamic economy report 2018/19: $2.1trn spent & UAE leads 5 sectors

Input costs and average prices charged

Average cost burdens in Dubai’s non-oil private sector increased for the seventh month running in October. Furthermore, the rate of inflation accelerated to a three-month high.

Output charges fell once again in the latest survey. Some firms linked lower selling prices to promotional activity. The rate of decline was modest overall, however.

Read Flexible working to contribute $10tr to global economy by 2030

Commenting on the Emirates NBD Dubai Economy Tracker, Khatija Haque, Head of MENA Research at Emirates NBD, said:

“The headline Dubai Economy Tracker Index fell to 52.5 in October, down from 54.4 in September and the lowest reading since March 2016.  While still in expansion territory, the headline index points to the slowest rate of growth in the private sector in more than two and half years.  The travel & tourism sector weighed on the overall index, as it contracted marginally last month. 

“Both output and new orders across the whole of Dubai’s private sector increased in October, but at markedly slower rates.  Output growth was the weakest year-to-date, while new order growth was the slowest since April 2016. 

“The employment index remained in contraction territory for the second month in a row, as more firms reported a decline in headcount than those reporting an increase. However, the vast majority of firms surveyed reported no change in job numbers in October. 

“Margin pressures intensified last month, as input costs rose at a slightly faster rate than in September, while output (selling) prices declined on average.  Stocks of inventories also declined last month, the first time this has happened since February 2016. 

“Despite the soft survey data, firms in Dubai were the most optimistic than they have been since at least 2012, with nearly 77% of respondents expecting their output to be higher in a year’s time.”