Dubai economy tracker declines to 7-month low in May

The Emirates NBD Dubai Economy Tracker Index (DETI) slipped to 55 in May, from a 26-month high of 57.7 in April, the bank in its latest report said on Sunday.

“The decline in the Dubai Economy Tracker index in May is consistent with what we’ve seen in the regional country surveys,” Khatija Haque, head of MENA research at Emirates NBD, said in a statement.

“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,” she added.

Output (58) and new work (59) were lower month-on-month, but the May readings pointed to a strong expansion in business activity and new orders. 

Firms surveyed indicated that more projects, particularly in the construction sector, had boosted business activity in May, the report said.

Employment (50.7) rose slightly in May, but the overall rate of job growth remains weak in the context of strong rises in output and new orders. Input costs were nearly unchanged in May as were selling prices. 

Firms appeared to be “strongly optimistic” about their prospects over the next 12 months, with the business expectations index rising to 71.3 in May, the report noted.   

“The Dubai Economy Tracker Index is a good proxy indicator for Dubai’s real GDP growth.  Our analysis shows that the correlation between the average quarterly reading for the DETI and official real GDP growth in Dubai is 68 percent,” Haque said. 

“The rise in the DETI year-to-date provides support for our view that Dubai’s economic growth is likely to accelerate this year,” she said. 

Analysis of individual sectors showed that construction sub-index outperformed in May (56.2), while wholesale and retail trade index declined to 55.5.

Travel and tourism sector growth also slowed last month, falling to 54.2 in May from 57 in April.