Stronger optimism among exporters, manufacturers and a number of retailers gearing for busier days ahead are the highlights of the latest quarterly business survey conducted by the Department of Economic Development (DED) in late June 2012.
The survey reveals that half of the businesses in Dubai expect the third quarter of 2012 to bring in increased sales and profits while 20% see stable sales. Sales expectations are especially higher among small and medium enterprises (SMEs) but large companies lead in comparison when it comes to investment outlook for the year ahead.
At 106 points, the composite Business Confidence Index (BCI) points to positive business sentiments, although it is lower than the level recorded for the previous quarter. The decline is an expected fallout of the summer holidays and onset of Ramadan, which businesses factor into their estimates.
In general, the business outlook for the third quarter of 2012 reflects expectations of improved sales and profits. At the same time, prices of most goods and services are expected to remain stable, compared to the second quarter.
His Excellency Sami Al Qamzi, Director General of the Department of Economic Development, commented: “DED launched the quarterly surveys to provide an objective assessment of the conditions and environment in which businesses in Dubai operate and plan their activities. The surveys have now become a useful benchmark for doing business in Dubai.”
Al Qamzi added: “Reliable and first-hand insight on the business dynamics and expectations in Dubai will also help the Government improve its economic policies and regulations in order to achieve a more favourable business environment.”
The overall business outlook for the third quarter is largely driven by the upbeat expectations of the Manufacturing sector while Trading and Services maintain a lower profile. Sales expectations are relatively higher for companies engaged in the manufacturing of glass, garments, furniture, chemicals and cement.
Meanwhile, growing demand in overseas markets has made exporters in Dubai relatively more upbeat on sales and profitability.
Within the Services sector, travel, transportation and construction companies are more optimistic compared to other sub-sectors. Around 40 per cent of the construction companies expect to win new contracts but restaurants and hotels anticipate a drop in business during Ramadan. At the same time higher demand expected during the Eid holidays is fuelling expectations in the Trading sector.
For the third quarter, 86% of the businesses surveyed will retain their current employee count while 11% spoke of plans to increase their workforce. Manufacturing firms continue to be the most optimistic on hiring.
Competition, insufficient demand, government fees, and uncertainty on regulations remain the top challenges listed by respondents – both SMEs and larger enterprises alike – in the survey. Larger enterprises mentioned utility costs and political uncertainty in the region too among key challenges.
DED conducts the quarterly surveys to measure the perceptions of the business community and capture the business outlook for the future. The survey serves as an effective tool for measuring the pulse of the business community and allowing the government and the private sector to track and analyse major trends and issues that have a bearing on business in Dubai.
A total of 500 companies in Dubai were covered in the survey. The companies were asked to indicate if they anticipated an ‘increase,’ ‘decrease,’ or ‘no change’ in key indicators such as sales revenues, selling prices, volumes sold, profits and number of employees.
Conducted in collaboration with the global consultancy firm Dun & Bradstreet (D&B), the quarterly survey uses a rigorous sampling approach that ensures adequate representation of small, medium, and large enterprises across the manufacturing, trading, and services sectors, while giving due attention to the perceptions of the exporting firms in Dubai.
For further information on the surveys, contact Laila Buabdulla, Head of Economic Information at DED, on +971 4 4455884.
Before joining SME Advisor, I worked as a producer/reporter for Forbes Media in New York. I obtained a Bachelor’s degree in Journalism and International Studies at the University of South Florida in the US. I am currently in Dubai working as Sub-Editor for SME Advisor Middle East, which is a business magazine published by CPI. You can follow me on Twitter: @joumanasaad or @SMEadvisorME and (Joumana Saad) or (SME Advisor) on LinkedIn.