09 February 2016
Dubai's private sector experiences the slowest overall improvement in business conditions for almost six years in January

Dubai: Latest survey data pointed to softer growth of Dubai's private sector at the end of 2015.

January data indicated a continued slowdown in the overall performance of Dubai's private sector economy, with the headline seasonally adjusted Emirates NBD Dubai Economy Tracker Index registering 50.7, down from 51.8 in December. Although still above the 50.0 no-change mark, the latest reading - a composite indicator designed to give an accurate overview of operating conditions in the non-oil private sector economy - pointed to the weakest overall expansion since February 2010.

By sector, wholesale & retail was the best performing category, with overall business conditions improving at a slightly faster pace than in December. Meanwhile, construction companies experienced a deterioration in operating conditions for the first time since this index began in March 2015.

The headline Emirates NBD Dubai Economy Tracker Index is derived from individual diffusion indices which measure changes in output, new orders, employment, suppliers' delivery times and stocks of purchased goods.

A reading of below 50.0 indicates that the non-oil private sector economy is generally declining; above 50.0, that it is generally expanding. A reading of 50.0 signals no change.

The survey covers the Dubai non-oil private sector economy, with additional sector data published for travel & tourism, wholesale & retail and construction.

Commenting on the Emirates NBD Dubai Economy Tracker, Khatija Haque, Head of MENA Research at Emirates NBD, said:

"The Dubai Economy Tracker survey shows the services sectors continuing to face challenging market conditions at the start of this year, while construction sector activity has also slowed sharply. Weak external demand was evident in the main UAE Purchasing Managers Index survey for January, and this likely weighed particularly heavily on Dubai's open, export oriented economy. "

Key Findings

-  Modest increases in private sector output and employment

-  New business volumes rise at slowest pace since February 2010

-  Construction was the weakest performing sub-sector, while wholesale & retail bucked the overall slowdown

Business activity and employment

Private sector business activity increased at a modest pace in January, but the latest rise was the weakest for three months. The wholesale & retail sector bucked the weaker overall trends seen at the start of 2016, with some firms noting an usually large boost to business activity from the Dubai Shopping Festival 2016. Construction firms, however, experienced an outright fall in output levels, which some linked to delays to new projects amid weaker confidence among clients. 

Employment levels increased slightly in January, but the rate of job creation remained weaker than the long-run survey average. Some firms suggested that the uncertain economic outlook had weighed on staff recruitment.

Emirates NBD Dubai Economy Tracker Index™
Seasonally adjusted, 50 = no-change



Sources: Emirates NBD, Markit

Incoming new work and business activity expectations

Total new orders placed at Dubai private sector companies increased only moderately in January, and the rate of expansion eased to the weakest for almost six years. Survey respondents suggested that falling oil prices and global economic uncertainty had led to subdued confidence among clients, in turn acting as a brake on new business growth. Construction companies recorded an outright fall in new work, while only the wholesale & retail sector recorded a faster upturn in incoming new business.

Looking ahead, private sector firms remain positive about the 12-month business outlook, but the degree of confidence was up only slightly from December's survey-record low. By sector, weaker optimism among construction and travel & tourism firms contrasted with an upturn in growth expectations across the wholesale & retail sector.

Input costs and average prices charged

Average cost burdens decreased for the first time in around five-and-a-half years in January, which firms linked to successful price negotiations with suppliers and weaker demand conditions. Meanwhile, output charges also dropped at the start of 2016. A number of survey respondents noted that strong competition for new work had resulted in promotional discounting.

Emirates NBD Dubai Economy Tracker Index: Sector summary

Seasonally adjusted, 50 = no-change



Sources: Emirates NBD, Markit

-Ends-

The next Dubai Economy Tracker Report will be published on 9th March 2016 at 09:15 (DUBAI)

About
The Emirates NBD Dubai Economy Tracker™, produced by Markit, is based on data compiled from monthly replies to questionnaires sent to senior executives in approximately 600 private sector companies, which have been carefully selected to accurately represent the true structure of the Dubai economy, including manufacturing, services, construction and retail.

The panel is stratified by Standard Industrial Classification (SIC) group, based on industry contribution to GDP. Survey responses reflect the change, if any, in the current month compared to the previous month based on data collected mid-month.

For each of the indicators the 'Economy Tracker report' shows the 'diffusion' index. This index is the sum of the positive responses plus a half of those responding 'the same'. Diffusion indexes have the properties of leading indicators and are convenient summary measures showing the prevailing direction of change. An index reading above 50 indicates an overall increase in that variable, below 50 an overall decrease.  

The Dubai Economy Tracker Index is a composite index based on five of the individual indexes with the following weights: New Orders - 0.3, Output - 0.25, Employment - 0.2, Suppliers' Delivery Times - 0.15, Stock of Items Purchased - 0.1, with the Delivery Times index inverted so that it moves in a comparable direction. The Dubai Economy Tracker Index is comparable to the UAE Purchasing Managers' Index.

Markit do not revise underlying survey data after first publication, but seasonal adjustment factors may be revised from time to time as appropriate which will affect the seasonally adjusted data series.

About Emirates NBD
Emirates NBD is a leading banking Group in the region.  As at 31st December 2015, total assets were AED 406.6 Billion, (equivalent to approx. USD 110.7 Billion). The Group has a leading retail banking franchise in the UAE, with more than 220 branches and over 940 ATMs and CDMs in the UAE and overseas.  It is a major player in the UAE corporate and retail banking arena and has strong Islamic banking, Global Markets & Treasury, Investment Banking, Private Banking, Asset Management and Brokerage operations.

The Group has operations in the UAE, Egypt, the Kingdom of Saudi Arabia, Singapore, the United Kingdom and representative offices in India, China and Indonesia.

The Group is an active participant and supporter of the UAE's main development initiatives and of the various educational, environmental, cultural, charity and community welfare establishments.

About Markit
Markit is a leading global diversified provider of financial information services. We provide products that enhance transparency, reduce risk and improve operational efficiency. Our customers include banks, hedge funds, asset managers, central banks, regulators, auditors, fund administrators and insurance companies. Founded in 2003, we employ approximately 4,000 people in 11 countries. Markit shares are listed on Nasdaq under the symbol MRKT. For more information, please see www.markit.com.

The intellectual property rights to the Emirates NBD Economy Tracker provided herein are owned by Markit. Any unauthorised use, including but not limited to copying, distributing, transmitting or otherwise of any data appearing is not permitted without Markit's prior consent. Markit shall not have any liability, duty or obligation for or relating to the content or information ("data") contained herein, any errors, inaccuracies, omissions or delays in the data, or for any actions taken in reliance thereon. In no event shall Markit be liable for any special, incidental, or consequential damages, arising out of the use of the data. Markit is a registered trade mark of Markit Group Limited.

For further information, please contact:
Ibrahim Sowaidan
Head - Group Corporate Affairs
Emirates NBD
Telephone: +971 4 609 4113 / +971 50 6538937
Email: ibrahims@emiratesnbd.com

Tricia Rego                                                                               Joanna Vickers
ASDA'A Burson-Marsteller; Dubai, UAE                                  Corporate Communications
Tel: 971-4-4507600;                                                               Markit
Fax: 971-4-4358040                                                              Tel: +44-207-260-2234
Email: tricia.rego@bm.com                                                   Email: joanna.vickers@markit.com

© Press Release 2016