The UAE’s non-oil business sector has experienced fluctuating growth patterns over recent months, as indicated by the S&P Global Purchasing Managers’ Index (PMI). While some periods showed robust expansion and increased hiring, others revealed a slowdown in demand momentum and subdued business optimism, reflecting a mixed economic landscape.
Navigating the Peaks and Valleys: UAE’s Non-Oil Sector Performance
The UAE’s non-oil private sector has demonstrated varied growth trends. January 2025 saw robust expansion, with the PMI at 55.0, slightly down from December’s 55.4 but still indicating strong growth. This was driven by favorable market conditions and easing cost pressures, though capacity pressures and competitive challenges persisted. Business activity and new orders rose sharply, despite a slight easing in the new orders sub-index to 59.0.
However, March 2025 marked a slowdown, with the PMI slipping to 54.0 from 55.0 in February, the slowest growth since September. New order growth moderated for the third consecutive month, and employment growth hit a nearly three-year low. Despite this, businesses increased input purchases to clear backlogs, and firms remained optimistic about future growth due to strong pipelines and infrastructure development.
April 2025 saw steady growth, with the PMI holding at 54.0. Employment rose at its fastest pace in 11 months as firms aimed to reduce workloads and support new business. New order growth quickened slightly, partly due to the strongest upturn in international demand in five months. Business activity growth, however, slowed to a seven-month low due to payment delays.
May 2025 presented the weakest growth in nearly four years, with the PMI falling to 53.3 from 54.0 in April. The rate of expansion in output was the slowest in 44 months, and new order growth, while robust, softened. Businesses reported competitive pressures and weaker trade impacting growth, leading to a record decline in inventories and subdued expectations for future output.
November 2024 showed steady growth, with the PMI edging up to 54.2 from 54.1 in October. Improved demand boosted new business, with the new orders sub-index reaching its highest level since August. Despite a robust expansion in business activity, the rate of output growth slowed. Firms accumulated faster backlogs of outstanding work, and job creation hit a 31-month low, with muted confidence in future business activity.
Key Takeaways
- January 2025: Robust expansion driven by favorable market conditions and easing costs, despite capacity pressures.
- March 2025: Slowdown in growth and new orders, with employment at a three-year low, yet firms remained optimistic.
- April 2025: Steady growth with increased hiring to manage workloads, but business activity growth slowed due to payment delays.
- May 2025: Weakest growth in nearly four years, marked by softening demand, record inventory decline, and subdued optimism.
- November 2024: Steady activity and improved new orders, but increased backlogs and low job creation, indicating uncertainty.
Sources
- UAE non-oil business sector growth slows in March, PMI shows, Reuters.
- UAE non-oil business growth slows in May, PMI shows, Reuters.
- UAE non-oil business sector expands robustly in January, PMI shows, Reuters.
- UAE non-oil business grows steadily in April as hiring speeds up, PMI shows, Reuters.
- UAE non-oil business activity growth holds steady in November, PMI shows, Reuters.
