Dubai's private sector growth recovered in November from a 31-month low recorded in October, thanks to output and new work, a survey showed on Wednesday.

The seasonally adjusted Emirates NBD Dubai Economy Tracker Index, a composite indicator that gives an overview of operating conditions in the non-oil private-sector economy, rose to 55.3 in November from the 52.5 recorded in October. It was the highest reading since June, but remains weaker than the 2017 average of 56, according to the survey.

A reading below 50 indicates the economy is shrinking, while a reading above 50 suggests expansion. A reading of 50 signals no change.

“November data signalled a stronger improvement in the health of Dubai’s non-oil private sector, reflecting a faster expansion in business activity, new work and a stable trend in employment,” the survey said. “The three main sectors monitored all registered stronger performances, with construction seeing the fastest growth.”

Dubai is implementing a number of reforms and the government is boosting spending in the run-up to Expo 2020, measures that are helping to prop up growth in the emirate. Reforms introduced this year include the waiving of corporate fines.

Companies recorded an uptick in both output and new work, the survey showed.

“Output in Dubai’s non-oil private sector increased at the sharpest rate since August, as companies reported good market conditions and successful promotional activity,” said the survey. “Moreover, the rate of expansion was greater than the trend for 2018 so far, and the historic series average [since January 2010].”

Construction was the fastest-growing sector with the index rising to 57.5 in November from 55.5 a month earlier. Wholesale and retail improved with a 55.4 reading, up from 53.7, while travel and tourism rose to 52.8 after contracting to 49.6 a month earlier.

But the improvement in business activity was mainly driven by price cuts. Input costs also rose, putting pressure on company margins.

“Average cost burdens for Dubai non-oil private sector firms rose for the eighth month running in November. Furthermore, the rate of inflation accelerated to a seven-month high,” the survey showed. “Output charges fell in November. Moreover, the rate of decline was the strongest since February 2016. Some firms linked lower selling prices to promotional activity.”

Employment expanded slightly after two consecutive months of contraction, with construction companies reporting a “robust” increase in headcounts, the survey showed.

Editor's Note: This article was originally published in The National on Wednesday December 12th, 2018 http://bit.ly/TNNonOilGrowth