Dubai economy tracker hits 26-month high in April

Business conditions in Dubai improved in April, growing at the fastest rate since February 2015, according to the Emirates NBD Dubai Economy Tracker (DET) report released Tuesday.

The seasonally adjusted DET Index rose to 57.7 in April from 56.6 in March as output and new orders increased at a strong pace, with the indices at 62.6 and 63.2 respectively.

According to the survey respondents, the economic backdrop was “generally supportive.” They also cited “promotional discounts” and “more construction projects” as factors driving the rise in new orders.

Companies reduced selling prices further in April (47.7), the ninth month in a row of declining average output prices.  Margins remained under pressure as input costs continued to rise, although at a modest rate (51.5), the report said.

Employment (51.2) increased at a faster rate than in March, but jobs growth was slow overall, especially when compared with the rate of new work and output growth.    

“Businesses were more optimistic on average in April compared with March, and this was also reflected in faster inventory accumulation, as firms stocked up pre-production inventory in anticipation of stronger demand and order growth in the coming months,” Khatija Haque, head of MENA research at Emirates NBD, said in the report.

The construction sector saw a sharp improvement in business conditions, after lagging the other key sectors since the start of the year, she added. 

The construction sector index rose more than 3 points to 57.9 in April – the fastest rate of growth since March 2015.

Output and new work in the sector grew as new projects were awarded and launched, leading to employment in the sector rising at the fastest rate in four months.

Meanwhile, wholesale and retail trade index rose to 57.8 in April.

Output in the wholesale and retail trade sector expanded at the fastest rate since the series began in March 2015, the report noted. However, traders’ margins remain under pressure, with output prices declining on average for the last year-and-a-half. 

The travel and tourism sector index climbed to 57 in April from 55.3 in March, signaling strong expansion in the sector last month.  Output and new order growth accelerated, although firms in the sector reduced selling prices marginally after five months of price rises.  Input costs were also slightly lower in April.

“Overall, the April Dubai Economy Tracker survey data suggests that Dubai’s economy gained momentum at the start of Q2, after a solid Q1 2017,” Haque said.

“The accelerated momentum in the construction sector in particular supports our view that infrastructure investment will be a key driver of Dubai’s growth this year, and over the next two to three years, as the emirate prepares to host Expo 2020,” she added.