Dubai’s non-oil private sector economy contracted last month as global uncertainty and low prices continue to weigh on activity.
The Emirates NBD Dubai Economy Tracker reading of 48.9 was down from 50.7 in January, and marked the first deterioration in overall operating conditions since data collection began in 2010. A reading of below 50.0 indicates that the private sector economy is generally declining; above 50.0, that it is expanding. A reading of 50.0 signals no change.
Travel and tourism companies noted the fastest deterioration in business conditions, according to the survey, while the health of the construction, wholesale and retail sectors also deteriorated, albeit at marginal rates.
“The Emirates NBD Dubai Economy Tracker reading in February highlights the challenges faced by Dubai’s external-orientated service-based economy,” said Khatija Haque, head of Mena research at Emirates NBD.
“Uncertainty about global economic growth, volatility in financial markets and low oil prices have weighed on sentiment and activity, while tourism and retail trade has also been affected by a strong US dollar.”
Emirates NBD said that companies were cutting prices at the fastest pace in the survey’s history.
It added: “Dubai private sector companies 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.”
Despite the lower reading for Dubai, the overall UAE PMI reading, released last week, showed an uptick in activity to 53.1 in February, from 52.7 the previous month.
But the index remained close to its all-time low, and was down significantly against February 2015’s score of 58.1.
Brent oil was trading just below $40 this morning, with concerns about supply levels lingering.
More to follow.
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