Dubai non-oil activity falls in February but momentum continues

Non-oil private sector activity in Dubai dipped slightly last month from a high of 23 months that was recorded during January, but overall business conditions remained rob­ust, according to a key economy tracking gauge.
The Emirates NBD Dubai Economy Tracker Index fell to 56.2 in February from 57.1 in January.
A reading above 50 indicates that the non-oil economy is expanding, while below 50 suggests that it is contracting.
The gains in the measure were driven by wholesale and retail, for the first time in six months. But while businesses were producing more, they were not hiring as much, the data showed.
"The February Dubai Economy Tracker survey continues to show robust expansion in Dubai’s non-oil private sector," said Khatija Haque, head of Mena research at Emirates NBD.
"Strong growth in output and new orders, which points to solid GDP growth in Q1 2017, is not being reflected in higher employment, however, and competition continues to weigh on selling prices. "
Overall for the UAE, non-oil private activity was on the rise last month, according to the Purchasing Managers’ Index (PMI), sponsored by Emirates NBD, that was released earlier this week.
The PMI survey, produced by IHS Markit, hit a 17-month high of 56 in February, up from 55.3 in January.
Average selling prices rose for the first time in almost one-and-a-half years, as companies passed on to clients part of their additional costs to protect margins.
New business increased last month at its fastest rate since September 2015, and higher export orders meant that companies raised output further. This in turn meant extra staff were hired, but the pace of job creation softened to its weakest in four months, according to the index.
The Minister of Economy, Sultan Al Mansouri, said this week that he expects GDP growth to reach 3.5 to 4 per cent this year, boosted by higher oil prices and infrastructure ­projects under way ahead of Expo 2020.
That compares with growth of about 3.7 per cent last year, he said, a somewhat more sanguine assessment than those of independent economists such as the IMF.
While some data suggest that the economy may be on the cusp of a rebound, many economists still remain cautious about a full economic recovery in the short-term as oil prices still remain far below 204 levels.

Standard Chartered reduced its UAE GDP growth forecast to 2.1 per cent this year from 3 per cent, but expects the economy to grow by 3.5 per cent in 2018, ahead of Expo 2020 in Dubai.

Source: The National