Economic growth momentum in Dubai is fading with pace of business activities slowing to new low in several months, according to a new survey.
Emirates NBD Dubai Economy Tracker Index plunged to 55.0 in May from April’s 26-month high of 57.7.
Output and new orders expanded at a sharp rate in the emirate, however.
The economy tracker showed that the month recorded the slowest pace of improvement since October 2016.
“The decline in the Dubai Economy Tracker index in May is consistent with what we’ve seen in the regional country surveys. However, the data still points to a robust expansion in the non-oil private sector last month. The construction sector survey is particularly encouraging with the sector index near the highest level in one-and-a-half years,” says Khatija Haque, Head of MENA Research at Emirates NBD.
Construction companies in Dubai experienced the fastest improvement in business conditions in May with index clocking 56.2, followed by wholesale and retail (55.5) and travel & tourism (54.2).
Private sector companies continued to raise their payroll numbers, but only at a marginal pace.
Non-oil companies operating in the emirates observed a further rise in new business during May. There was an increase in market demand on the back of promotional activities.
Dubai private sector companies are optimistic about their growth prospects for the year ahead. The degree of positive sentiment accelerated to a three-month high, driven by improved optimism across all three monitored key sectors, the survey noted.
Other highlights from the tracker
Inflationary pressures faced by private sector firms eased to a 14-month low and were only fractional. The increase in input costs in construction and wholesale and retail firms offset a decline reported by travel & tourism firms.
Led by construction firms, output charges rose for the first time in 11 months, although at a fractional pace. Firms in the travel and tourism and wholesale and retail sectors offered discounts to stimulate demand amid reports of intense competition.