A gauge of the Dubai economy says the emirate’s business conditions improved in March amid gains in output, new orders and employment. The latest Emirates NBD Dubai Economy Tracker says that the wholesale and retail, travel and tourism and construction industries led the advance, which capped the index’s strongest quarter since the first quarter of 2015.
The index rose to 56.6 in March from 56.2 in February.
Emirates NBD sponsors the monthly survey of business conditions in the emirate’s non-oil private sector by Markit, a financial information services company. A reading above 50 suggests that the non-oil economy is growing, while a reading below 50 suggests that it is contracting.
“The March data is consistent with sharp improvements in business conditions across Dubai’s non-oil private sector economy, with output, new orders and employment all expanding at a faster pace than the previous month,” said Tim Fox, head of research and chief economist at Emirates NBD.
The best performing subsector was wholesale and retail, whose index stood at 57.1. The second-best performer was travel and tourism at 55.3, followed by construction at 54.8. Those are the only three subsectors covered by the survey.
While the latest data collected showed an increase in overall employment, the pace of job growth was relatively subdued, the data collected shows.
There were however other clearer bright spots such as when it came to new work and business activity expectations. The pace of new business growth, which advanced for the thirteenth straight month, rose by the highest degree in over two years. Those polled for the survey said that the gains were due to an improvement in economic conditions, an increase in construction as well as promotions to boost sales.
When it came to business optimism going forward, respondents were strongly optimistic about the next 12 months even though the intensity of the optimism slipped to its weakest in seven months despite the increasing output. The report did not specify the reason behind the weaker optimism in relative terms.
The finding of Markit accord with what has been seen on a nationwide basis in the month of March. For the UAE as a whole non-oil businesses were at their most confident in more than a year and a half in March. That adds to signs throughout the first quarter that the country is starting to recover from a slump induced by the low oil price.
According to the Emirates NBD/ IHS Markit Purchasing Managers Index for the UAE as whole released last week, non-oil PMI climbed to a 19-month high of 56.2 in March, from 56.0 in February.
Yet while there are a number of encouraging signs of a rebound in economic growth, not everyone is totally convinced that this is the year that the economy will bounce back after several difficult years amid low commodity prices.
“With regards to Dubai, we are not expecting growth to pick up strongly this year as a revival of new investments pipeline beyond what is already underway may take longer to materialise while private consumption could remain constrained this year,” said Dima Jardaneh, an economist at Standard Chartered in Dubai.
Ms. Jardaneh said she had recently downgraded her economic growth projection for the UAE as a whole for 2017 to 1.5 per cent from 2.1 per cent.