(MENAFN- Khaleej Times) The overall business outlook of Dubai for the final quarter of 2013 has improved remarkably compared to the previous quarter even as many businesses look forward to investing in new capacity upgrades over the next 12 months in anticipation of increased sales volumes, revenues and profits, a survey by the Department of Economic Development, or DED, shows.
The quarterly survey, covering 508 companies in Dubai, revealed that the overall Business Confidence Index recorded year-on-year increase of 17.3 points in third quarter.
The DED survey results came on the heels of the HSBC UAE Purchasing Managers' Index that showed an acceleration in non-oil private sector business activity to a record high in November as both output and new orders increased sharply. The HSBC index, which measures the performance of both manufacturing and services, rose to 58.1 points in November from 56.3 in the previous month.
The DED composite Business Confidence Index (BCI) stood at 141.6 points in third quarter. A quarter-on-quarter comparison shows that the third quarter index is 17.3 per cent up from the previous quarter index due to rising demand and improved economic activity expected during the final quarter owing to the festival season and seasonal tourist inflows.
The overall business outlook for the final quarter improved remarkably compared to the previous quarter with 58 per cent of respondents expecting an improvement in business conditions as against 40 per cent in 2013 third quarter.
Anticipating increase across sales volumes, revenues, profits and hiring many businesses are planning to invest in new capacity upgrades over the next 12 months as well. Moreover plans to upgrade technology have intensified as 60 per cent of firms revealed such intentions over Q3 compared to 53 per cent only in the previous quarter. "Over and above seasonal upswings in economic activity there is a high level of confidence resulting from the steady improvements in the ease of doing business in Dubai," said Sami Al Qamzi, director-general of DED.
"Apparently, businesses are willing to spend on growth and expansion, with economic activity across traditional non-oil sectors such as tourism and logistics bound to rise and recovery across other critical sectors such as construction gaining pace. This optimism and upward momentum will further create opportunities and new demand," said Al Qamzi.
Real estate and construction companies are expecting new projects or contracts in local and regional markets, which would boost overall business activity. Driven by higher demand from all major sectors, 57 per cent of the transportation companies also expect better business in the last quarter.
DED survey shows that 95 per cent of businesses expect either an increase or no change in sales volume during the next quarter (as against 83 per cent in third quarter and 90 per cent in 2012 last quarter. Those who expect higher sales in fourth quarter have also grown in strength from 44 per cent to 61 per cent between the last two quarters.
"The positive outlook is underlined by strong sales revenue expectations, with 64 per cent companies expecting better revenues in the last quarter and another 32 per cent confident of stable sales, driven largely by real estate activity and rising prices. Selling prices are expected to remain stable with 73 per cent expecting no change in their prices while 22 per cent expect higher prices in fourth quarter," DED said in its report.
"Exporters are more optimistic compared to the overall business community on sales volume, but relatively less optimistic on selling prices. Profitability expectations are also in line with the overall sales expectations, with 58 per cent expecting better profits based on higher volumes, new contracts with better margins and strong demand," DED said.
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