Optimism about Business in Dubai at 19- month high in June

A robust expansion in business activity and order growth was recorded in Dubai during the month of June, although the pace of growth was slower than in May.

The output/ business activity index eased to 55.5 last month from 57.6 in May, while the new orders index fell to 56.1 from 58.7 in May. Participants in the Emirates NBD Dubai Economy Tracker cited greater competition for new work and relatively subdued client demand as reasons for slower new order growth. This is unsurprising given the start of Ramadan, with its shorter working hours, in mid-June.

Despite slower output and order growth, firms surveyed in Dubai were very optimistic about the outlook over the next year, with the business outlook index reaching 80.5, up from 62.1 in May and the highest reading since October 2013.

High expectations about future order growth may have contributed to the stronger employment growth in June, which accelerated at the fastest pace in eight months. The backlogs of work declined last month, with the index falling to 49.0 in June from 50.5 in May.

Input costs rose at a faster pace in June relative to May, while output prices declined for the fifth consecutive month, keeping margins under pressure. Competitive pressures were again cited as the reason for firms lowering output prices, with the wholesale and retail sector showing the strongest rate of discounting last month.

Travel & Tourism activity accelerated in June

Output/ activity in the travel & tourism sector rose at a faster pace in June even as the summer ‘low season’ approached. The activity index rose to 55.3 last month from 54.1 in May. The construction sector saw the fastest activity of the three key sectors surveyed in June, with the index reading 57.9.

However, the pace of growth was slightly slower than in May. Activity in the wholesale & retail sector also increased at a slower pace, with the output index easing to 54.9 in June from 56.5 in May.

Construction

Both activity and new order growth in the construction sector remained robust, albeit slightly slower, at 57.9 and 58.0 respectively in June. Despite the moderation in orders and output growth, employment in the construction sector grew at a faster rate than in May, with the employment index rising to 57.5.
Employment growth in construction outpaced that in travel & tourism and retail & wholesale trade.