UAE’s non-oil sector business activity hits 9-month high in December: PMI

The UAE's non-oil private sector saw an accelerated expansion in business activity during December, driven by strong demand and a significant increase in output. The seasonally adjusted S&P Global UAE Purchasing Managers' Index (PMI) rose for the third consecutive month in December, climbing from 54.2 in November to 55.4, reaching its highest level in nine months. The Dubai PMI also increased from 53.9 in November to 55.5 in December, similarly indicating the strongest growth in operating conditions for nine months.

David Owen, Senior Economist at S&P Global Market Intelligence, stated, "The UAE's non-oil business conditions achieved their best expansion in nine months during December, with the latest PMI data capping off another year of growth and placing the sector in a strong position for 2025."

Year-end market conditions stimulated the expansion. The UAE's non-oil private sector witnessed booming market conditions at the end of the year, which helped businesses secure new customers and larger order volumes. Notably, despite a slowdown in sales to international clients, overall new order growth reached its highest level in nine months. Consequently, output expansion by businesses was the greatest since April 2024. Qualitative reports indicate that higher demand, ongoing projects, discounted prices, and favorable weather conditions all supported business activity.

However, backlogs of work increased rapidly in December due to constraints in hiring. Employment growth was among the slowest in two and a half years, with the PMI survey attributing this to profit pressures. This led to an increase in unfinished work at one of the fastest rates in the survey's history. Owen added, "Hiring appears to be a limiting factor - the rate of employment growth was barely changed from November's 31-month low. While profit constraints appear to be deterring some firms from hiring more staff, as charges decreased despite rising costs, there is certainly a need to increase resources to ensure companies capitalize on demand in the new year."

Price pressures eased further. The UAE's non-oil private sector also saw the rate of input price inflation slow for the fifth consecutive month in December, falling below its long-run trend. Although firms noted increased costs for raw materials, transportation, food, and technology, the overall rate of purchase price increases was the slowest since April 2024. He also added, "Purchasing growth also accelerated to a 13-month high, which may help to boost inventories after a weak trend during the second half of 2024." Wage pressures rose somewhat, but not significantly. Meanwhile, average charges decreased for the third consecutive month in December, with discounts closely linked to fierce competition and efforts to support growth. However, the decline in charges was the slowest of the period.

Companies in the UAE's non-oil private sector expressed optimism about the outlook for 2025, but their level of confidence decreased for the second consecutive month in December. Optimism was at its second-lowest level since the beginning of 2023. The articles on our website are for informational purposes only. Content containing financial, investment, tax, or legal matters should not be considered financial advice or recommendations. Please see our full disclaimer policy.