UAE - Business confidence towards growth prospects in Dubai remains strongly positive even as conditions improved at the slowest rate in three months, with growth moderating across three broad sectors, an Emirates NBD survey revealed on Thursday.

While output continued to improve, stimulated by a further expansion in new orders, business confidence softened to a three-month low albeit future growth prospects remained very positive, Emirates NBD Dubai Economy Tracker report said.

Firms continued to stimulate client demand through price discounting as job creation picked up, led by the construction sector, but remains relatively subdued by historical standards, said the report.

Khatija Haque, Head of Mena Research at Emirates NBD, said while firms reported higher output and new orders in July, this was on the back of extensive price discounting, with average selling prices falling at the sharpest rate since January 2017. "At the same time, input costs continued to rise, further squeezing margins. Against this background, it is unsurprising that employment growth so far this year has been the softest on record."

The Emirates NBD Dubai Economy Tracker Index registered 54.9 in July, down from 56.0 in June. The figure indicated a slower expansion in Dubai's private sector that was below the long-run average.

At the sector level, construction companies reported the sharpest growth in July (56.9), followed by wholesale & retail (56.3) and travel & tourism (54.5) respectively. However, all three sectors posted softer growth in July relative to June, said the report.

According to the report, business activity increased once again in July, although the rate of expansion eased to a three-month low. Companies that reported higher output frequently linked the increase to stronger inflows of new business.

"Reflecting increased output requirements, firms hired additional staff in Dubai's private sector. The rate of growth accelerated in July, but remained weak in the context of historical data," said the report.

Analysts said along with the new UAE investment law that would further boost FDI inflows, looser fiscal policy and large investments in infrastructure should prop up growth in Dubai's non-oil economy by supporting private investment momentum.

Most analysts are optimistic that the recent spate of reforms and stimulus measures would go a long way in reinforcing Dubai's position as a sought-after business destination. They said various stimulus packages along with the new federal rules for 10-year residency and 100 per cent company ownership by foreigners would act as a catalyst to attract bigger flow of foreign direct investments and also help businesses tide over the challenges.

According to Emirates NBD report private sector businesses in Dubai reported a sharp improvement in incoming new work during July amid reports of robust domestic client demand and promotional activity. Construction companies reported the strongest expansion in new order books. "Business activity expectations remained strongly optimistic, despite easing to a three-month low in July. Companies pinned hopes on new projects relating to Expo 2020 and successful marketing efforts," it said.

Input price inflation across Dubai's private sector accelerated to a three-month high in the latest survey. The rate of inflation was marked overall, reflecting higher wage and raw material costs. Promotional activity led to the greatest fall in selling prices across the private sector since January 2017. Price discounting has been recorded for three months running, the banks aid.

 

Copyright © 2018 Khaleej Times. All Rights Reserved. Provided by SyndiGate Media Inc. (Syndigate.info).

Disclaimer: The content of this article is syndicated or provided to this website from an external third party provider. We are not responsible for, and do not control, such external websites, entities, applications or media publishers. The body of the text is provided on an “as is” and “as available” basis and has not been edited in any way. Neither we nor our affiliates guarantee the accuracy of or endorse the views or opinions expressed in this article. Read our full disclaimer policy here.