Dubai’s private sector growth hits six-year low in January

Dubai’s private sector growth continued to soften in January, with the seasonally adjusted business index falling to 50.7— the weakest overall expansion since February 2010, Emirates NBD revealed in their latest survey.

The Dubai Economy Tracker Index, however, remained above the 50.0 no-change mark. A reading below 50.0 indicates that the non-oil private sector economy is declining, while above 50.0 is generally expanding.

Wholesale and retail was the best performing sector as overall business conditions improved at a slightly faster pace than in December, the survey report said. Construction companies, however, experienced their first decline in operating conditions since March 2015.

“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,” said Khatija Haque, head of MENA Research at Emirates NBD. “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.”

According to the data, employment levels increased in January, but the rate of job creation was weaker than the survey average. Some respondents attributed the slowdown to the “uncertain economic outlook” weighing on staff recruitment.

New orders increased only moderately, and the rate of expansion eased to its level weakest in almost six years as client confidence fell amid slumping oil prices and economic uncertainty, the report said.

“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,” the report said.

Write to Nadeshda Zareen at nadeshda.zareen@argaamplus.com