UAE’s non-oil business sector has experienced fluctuating growth in recent months, as indicated by the Purchasing Managers’ Index (PMI). While some periods showed robust expansion and increased hiring, others revealed a slowdown in demand, competitive pressures, and challenges in meeting sales targets, painting a mixed picture of the economic landscape.
Navigating The Peaks And Valleys Of UAE’s Non-Oil Economy
The UAE’s non-oil private sector has demonstrated a dynamic performance over recent months, characterized by periods of strong growth interspersed with moderation. The S&P Global UAE Purchasing Managers’ Index (PMI), a key indicator of economic health, has shown significant fluctuations.
- January 2025: The non-oil sector started the year robustly, with the PMI at 55.0, slightly down from December’s 55.4 but still indicating strong expansion. New orders and business activity rose sharply, driven by favorable market conditions and easing cost pressures. However, capacity pressures and competitive challenges were noted, with business confidence reaching its lowest since December 2022.
- March 2025: Growth moderated significantly, with the PMI slipping to 54.0 from 55.0 in February, marking the slowest pace since September. New order growth slowed for the third consecutive month, and employment growth hit a nearly three-year low due to difficulties in finding suitable candidates. Despite the slowdown, businesses increased input purchases to clear backlogs, and optimism for future growth remained.
- April 2025: The non-oil private sector held steady, with the PMI remaining at 54.0. Employment saw its fastest rise in 11 months as firms aimed to reduce workloads and support new business. New order growth quickened slightly, partly due to the strongest international demand in five months. However, business activity growth slowed to a seven-month low, impacted by payment delays.
- May 2025: Growth slowed to its weakest pace in nearly four years, with the PMI falling to 53.3 from 54.0 in April, the lowest reading since September 2021. Output expansion was the slowest in 44 months, and new order growth, while robust, was the softest in seven months. Business expectations for future output were subdued, reaching their lowest level since January, partly due to competitive pressures and weaker trade.
Key Takeaways
- The UAE’s non-oil business sector has experienced a period of mixed trends, with robust expansion in some months and significant slowdowns in others.
- The Purchasing Managers’ Index (PMI) has been a crucial indicator, reflecting these fluctuations.
- Challenges include softening demand momentum, competitive pressures, difficulties in recruitment, and concerns over future growth despite underlying optimism.
- Firms have shown adaptability, increasing input purchases and hiring to manage backlogs and support new business, even amidst varying market conditions.
Outlook And Challenges
Despite the recent slowdowns, UAE firms generally remain optimistic about future growth, supported by strong sales pipelines and national infrastructure development. However, concerns persist regarding competitive pressures, cash flow issues from backlogs, and the ability to sustain revenue growth. The varying performance across months highlights the need for businesses to remain agile and responsive to evolving market conditions.
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.
