DUBAI: Private sector companies in Dubai signalled deterioration in overall operating conditions in February for the first time in six years as global uncertainty and low prices continued to weigh on activity.
However, an improved level of optimism was evident towards the one-year business outlook among Dubai private sector firms. Emirates NBD Dubai Economy Tracker data signalled a renewed decline in overall business activity across Dubai’s private sector.
“Though only modest, it was the first time that activity had fallen since January 2010. All three key sub-sectors noted modest declines in activity during February, led by travel and tourism companies. Anecdotal evidence generally linked reduced business activity to weaker market conditions and fewer new orders,” the bank said.
Data shows that private sector companies in Dubai raised their workforce numbers only slightly in February, as has been the case in each of the past three months. A number of monitored businesses mentioned that staff hiring had been dampened by softer growth in new work.
The survey data also signalled a reduced amount of new business in Dubai’s private sector during February. “It was the first time that new orders had declined in just over six years of data collection. Companies that reported lower new business generally commented that an uncertain global economic outlook and falling oil prices had made clients more unwilling to commit to spending. New business fell across all three monitored sub-sectors in February and, in line with the trend for activity, travel & tourism saw the fastest reduction in new work.” Despite a gloomier overall economic picture, Dubai private sector firms expressed an improved level of optimism towards the one-year business outlook in February.
That said, the overall degree of positive sentiment remained weak in the context of historical data. At the sub-sector level, business confidence improved across travel & tourism and wholesale & retail, the bank said.
At 48.9, the headline seasonally adjusted Emirates NBD Dubai Economy Tracker Index was down from 50.7 at the start of 2016 and signalled a marginal deterioration in the health of the sector.
