Emirates NBD Dubai Economy Tracker™

Dubai private sector maintains strong growth trajectory in August

Dubai, September 8, 2016: August data signalled a further strong upturn in business activity across the Dubai private sector economy, with the latest improvement only slightly less marked than the 16-month peak seen in July. At 55.7 in August, the seasonally adjusted Emirates NBD Dubai Economy Tracker Index was down fractionally from 55.9 in July but above the 50.0 no-change threshold for the sixth successive month. Moreover, the headline index - a composite indicator designed to give an accurate overview of operating conditions in the non-oil private sector economy - is on track for its highest average reading for any quarter since the start of 2015.

All three key sub-sectors monitored by the survey experienced improving business conditions in August, albeit at a slightly slower pace than in the previous month. Wholesale & retail remained the best performing (index at 55.5), followed by travel & tourism (54.7) and construction (52.6). Survey respondents mainly pointed to strong sales growth in August, supported by improving economic conditions and successful discounting strategies to stimulate client demand.

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:

"After a strong reading in July, it is unsurprising to see a slightly softer Dubai Economy Tracker index in August.  Output and new orders still increased sharply last month, partly due to more aggressive price discounting by firms.  Businesses also appear to be more optimistic about the coming months, which is encouraging."

Key Findings

Robust upturn in business activity and incoming new work

Business expectations rebound from July's six-month low

Price discounting continues in August, despite sustained rise in input costs

Business activity and employment

Private sector business activity in Dubai picked up sharply in August, with the pace of expansion close to the 17-month high recorded during July. Reports from survey respondents cited the launch of new products and a sustained upturn in incoming new work.

Despite a further robust increase in business activity, latest data indicated only a marginal rise in private sector employment. Moreover, the pace of job creation remained softer than the average since the survey began in 2010. Some firms cited a lack of pressure on operating capacity, alongside a squeeze on margins from price discounting.

Incoming new work and business activity expectations

Mirroring the trend for business activity, August data signalled another strong rise in new work received by Dubai private sector companies. The latest expansion in new order books was the second-fastest since March 2015. This contributed to a rebound in confidence regarding the year-ahead business outlook, with the degree of optimism picking up from July's six-month low. Survey respondents cited more stable global economic conditions and expectations of rising demand from projects related to Expo 2020.

Input costs and average prices charged

Input price inflation persisted for the sixth consecutive month in August, with higher operating costs recorded across all three key sub-sectors. However, the rate of inflation remained modest and slower than the long-run survey average. Meanwhile, average prices charged by private sector firms decreased at the fastest pace since February, which was linked to intense competition and promotional discounting strategies during August.

Emirates NBD Dubai Economy Tracker Index: Sector summary




-Ends-

The next Dubai Economy Tracker Report will be published on 11^th October 2016 at 08:15 (DUBAI) 

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

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 30th June 2016, total assets were AED 425.8 Billion, (equivalent to approx. USD 116 Billion). The Group has a significant retail banking franchise in the UAE and is a key participant in the global digital banking industry, with over 90 per cent of all financial transactions and requests conducted outside of its branches. The bank currently has more than 220 branches and over 955 ATMs and CDMs in the UAE and overseas and a large social media following, being the only bank in the Middle East ranked among the top 20 in the 'Power 100 Social Media Rankings', compiled by The Financial Brand. 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. Ratings agency Moody's recently upgraded the bank's long-term deposit and senior unsecured ratings to A3 and its baseline credit assessment (BCA) to ba1. In addition to the bank's strong funding and liquidity profile, the upgrade reflected the bank's improved loan quality, and its higher loss-absorption buffers.

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.

For more information, please visit: www.emiratesnbd.com

About IHS Markit (www.ihsmarkit.com)
IHS Markit (Nasdaq: INFO) is a world leader in critical information, analytics and solutions for the major industries and markets that drive economies worldwide. The company delivers next-generation information, analytics and solutions to customers in business, finance and government, improving their operational efficiency and providing deep insights that lead to well-informed, confident decisions. IHS Markit has more than 50,000 key business and government customers, including 85 percent of the Fortune Global 500 and the world's leading financial institutions.  Headquartered in London, IHS Markit is committed to sustainable, profitable growth.

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© Press Release 2016