Dubai – Mubasher: Business conditions of the non-oil private sector economy in the emirate of Dubai have improved in April at the fastest pace in four years, reflecting new business directions.

Business conditions in the wholesale and retail sector have got better at a series record pace, impacted somehow by sharp price discounting and promotional activity, according to a survey conducted by IHS Markit for Emirates NBD.

As for the non-oil private sector as a whole, prices of the products and services have dropped for the consecutive twelfth month, the survey said.

The seasonally adjusted Emirates NBD Dubai Economy Tracker Index increased to 57.9 in April from 57.6 in March, the highest since February 2015, it highlighted.

“The Index has recorded above its long-run trend level of 55.2 throughout the first four months of 2019,” the survey added.

Activities of sectors

Business conditions at wholesalers and retailers have improved in April and the headline index for the sector rose to 60.1, the highest since March 2015.

Meanwhile, the travel and tourism sector has recorded its second-highest growth last April at 58.8, below 59.8 in March, while the construction figure grew to 53.4, the survey revealed.

Khatija Haque, head of MENA Research at Emirates NBD, commented: “The sharp rise in output and new work in April is encouraging, as it suggests GDP growth is accelerating after a relatively soft 2018.”

“However, this growth in the volume of activity appears to be underpinned by price discounting, rather than an improvement in underlying demand. As a result, firms are reluctant to boost hiring and consumers are likely to remain cautious,” Haque added.

Total business activity’s growth rate has slipped in April as compared to March, marking a four-year high, however, it remained among the sharpest registered since the series began in 2010, the survey said.

Growth rates in the three key monitored sectors have progressed, capped by the travel and tourism sector, according to the survey.

Employment activity

On the other hand, the employment rate in Dubai’s non-oil private sector remained the same in April as in March, maintaining the trend registered over the past 12 months, in which the Employment Index has averaged exactly 50.0, the survey noted.

Jobs in both the travel tourism and construction sectors contracted in April, while it rose slightly in the wholesale and retail sector.

New business activity

The level of incoming new business accelerated since January 2015 in April at 66.6, the survey found.

“New sales growth at wholesalers and retailers hit a new record high (70.8) while construction firms registered a comparatively weaker rise (55.7), albeit the strongest in 2019 so far,” it said.

The rapid growth of new work across the non-oil private sector contributed to boosting the 12-month outlook for activity to the strongest since the series began in 2010.

Input costs

Price pressures in the non-oil private sector were weak in the fourth month of 2019, and prices charged for goods and services slipped for the twelfth month in a row at the fastest rate since November 2018, the survey said.

Discounting was solid in the wholesale and retail and construction sectors, according to the survey.

“Meanwhile, average input costs rose at the slowest rate in 2019 so far, and one that was well below the long-run average,” the survey pointed out.