UAE Non-Oil Firms Post Strongest Expansion In Seven Months

2025-10-12 05:01:49

(MENAFN- The Arabian Post)

UAE's non-oil private sector continued to gain momentum in September, with the seasonally adjusted S&P Global UAE Purchasing Managers' Index reaching 54.2 - the highest reading in seven months and up from 53.3 in August. The increase underscores a solid acceleration in non-oil business activity in the country's diversified economy.

Growth was led by a sharp upswing in new business; the new orders sub-index jumped to 57.2 from 53.1, marking its fastest pace since February. Over 30 percent of firms surveyed reported higher order intake, reinforcing growing domestic demand. Employment rose at its most rapid rate since May, although inventory levels were pared back for the third month in succession, as firms sought to balance demand with leaner stockholding.

Cost pressures remain a concern: input costs continued to rise, driven in part by wage inflation and raw material price volatility. Still, firms moderated output price inflation, likely due to competitive pressures. Backlogs of work increased, though at a slower pace than in earlier months, signalling that firms are coping with rising workloads.

Dubai mirrored the national trend, with its PMI climbing to 54.2, supported by strong increases in new work, output, and hiring. The emirate's performance highlights its continued role as a business, trade and tourism hub.

Analysts see this strength in the non-oil sector as a positive signal for UAE's broader macro outlook. The Central Bank has raised its 2025 GDP growth forecast to 4.9 percent, citing elevated oil output and robust performance in non-hydrocarbon sectors, which already account for more than three-quarters of gross domestic product.

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Among challenges, firms remain cautious on the price front, showing restraint in passing costs fully to customers. Wage pressures, supply chain disruptions, and competitive market dynamics are likely to remain key headwinds. Still, optimism is buoyed by strong demand pipelines: about 15 percent of surveyed companies expect increased activity in the coming year.

Given this backdrop, the acceleration in September paints a picture of a private sector regaining traction - albeit in a careful, measured fashion as firms juggle growth, margins and external risks.

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