Dubai’s Business Confidence Index Declines due to Summer Slowdown

• Quarterly business confidence survey shows businesses preparing to expand and upgrade technology

Robust expectations among manufacturing firms and construction-related activity had continued to support overall business confidence in Dubai during the past three months in spite of the seasonal slowdown during summer, shows the quarterly business confidence survey conducted by the Department of Economic Development (DED).

The survey for the second quarter (Q2) of 2015 also revealed that exporters are more optimistic than the overall business community about sales revenues, volumes and profits, underlining the dominance of export and re-exports in overall economic activity in Dubai.
The Composite Business Confidence Index (BCI) in Q2 2015 stands at 110.1 points, comparable to the index a year ago (112.2 in Q2 2014), but 20 points lower than the previous quarter, which preceded the summer slowdown. Sales revenue expectations for Q3 2015 also fall in line with the forecast a year ago, but weaker when compared to the previous quarter. Most parameters in the survey reflect a similar trend.

Businesses are also taking advantage of the slow summer months, focusing on capacity expansions and technology upgrades. Almost 77% businesses expect to invest in capacity expansion compared to 74% each in the first quarter of 2015 and Q2 2014. Technology upgrades are planned by 71% of the respondents in Q2 2015 as against 69% in the previous quarter and 66% a year ago.

Manufacturing firms are more hopeful on sales revenues, volumes, selling prices, net profits and new purchase orders while the outlook for hiring is strongest among service sector companies.

The survey also shows that SMEs have a modestly stronger forecast in comparison to large firms, as shown by their respective BCI scores of 111.6 points and 108.9 points. SMEs hold a stronger outlook on all four parameters in the index, i.e. volumes, selling prices, employment and profits.