Dubai’s business activity improved last month, boosted by the emirate’s wholesale and retail firms, with optimism across all sectors rising in spite of ongoing price discounting to secure new business.
Emirates NBD’s Dubai Economy Tracker Index rose to 55.6 in October from 55.2 in September, after falling from 56.3 in August. A reading of below 50 indicates that the non-oil private sector economy is in decline while a reading above 50 suggests that it is expanding.
The bank reported that output and new orders rose "at a strong rate" during the month across wholesale and retail, construction, and travel and tourism sectors, even as firms have had to cut prices to secure new business.
“As has been the case for most of the past year, firms cut selling prices on average in October, although to a smaller extent than in September,” the bank said in its report on Thursday.
__________________
Read more:
UAE non-oil economy improves in October on anticipated uptick in demand
Emaar Malls third quarter net profit up 11%, beats estimates
__________________
“Margins continue to be squeezed as input costs increased at the fastest rate in more than two years.”
Hiring across the emirate's economy remains relatively static, the bank noted, with nearly 96 per cent of firms surveyed reporting no change in headcount during the month.
However, business optimism for the coming 12 months rose to its highest level of the year last month, with firms pinning their hopes on improving economic conditions and new projects related to Expo 2020.
Dubai's economy is forecast to grow by 3.3 per cent in 2017, with a growth rate of 3.5 per cent predicted for 2018, according to the IMF.
Officials from government body Dubai Economy forecast that the emirate’s GDP will expand 3.1 per cent this year and 3.6 per cent next year, as economic drivers shift from trade to real estate, manufacturing and tourism.
Dubai's wholesale and retail trade sector was the primary driver of the emirate's business activity in October. The sector's index rose to 60 in October, its highest reading since the survey began in March 2015, on strong output and new orders.
"Surprisingly, this strong performance was not due to heavy price discounting in the sector – the output price index stood at 49.5 last month, only marginally below the neutral level and signalling broadly stable selling prices last month," Emirates NBD noted.
Retail activity is picking up in the emirate, which had earlier suffered from a strong dirham and lower purchasing power.
Emaar Malls, the retail business majority-owned by Emaar Properties, this month reported an 11 per cent rise in third quarter profits. The company reported that footfall at the Dubai Mall, the UAE's largest retail destination, received a record 58 million visitors in the first nine months of the year.