The seasonally adjusted Dubai Economy Tracker Index, a composite indicator designed to show an overview of operating conditions in the non-oil private sector economy in the Gulf Arab sheikhdom, fell to 54.9 in July from 56 in June, the United Arab Emirates (UAE) universal bank Emirates NBD said Thursday.

A tracker value above 50 points indicates an expanding economy while a figure below 50 means a contraction.

The business confidence towards growth prospects in Dubai "remained strongly positive, but also softened to a three-month low," Emirates NBD said in an e-mailed statement.

Khatija Haque, head of MENA Research at the UAE lender, warned that the average selling prices are falling "at the sharpest rate since January 2017" despite "reported higher output and new orders in July ... on the back of extensive price discounting."

Apart from price discounting, Dubai is also witnessing asset deflation as the Dubai stock market's lead index DFMGI has lost 16.58 percent this year, making the gauge one of the worst performing stock market in the Middle East.

"Against this background, it is unsurprising that employment growth so far this year has been the softest on record," said Haque.

In contrast, construction companies reported the sharpest growth in July (56.9), followed by wholesale and retail (56.3) and travel and tourism (54.5) respectively.