UAE non-oil business sector grows strongly to 55.0 in January, PMI indicates

A survey reveals that in early 2025, the UAE's non-oil private sector continued its robust expansion of business activity, although capacity pressures and competitive challenges presented certain obstacles. The seasonally adjusted S&P Global UAE Purchasing Managers' Index (PMI) stood at 55.0 in January, slightly below December's nine-month high of 55.4, but well above the 50.0 threshold indicating expansion, signaling continued growth in the sector.

Business activity and new orders experienced substantial growth, primarily driven by a favorable market environment and easing cost pressures, although the pace of growth has slightly decelerated. Reuters reported that the new orders sub-index fell to 59.0 in January, down from 59.3 in December, indicating a slight moderation in demand growth.

David Owen, Senior Economist at S&P Global Market Intelligence, stated, "The strong expansion of business activity and new business, coupled with lower input cost inflation, suggests that the UAE economy is in a healthy state." This positive assessment underscores the resilience and potential of the UAE's economic landscape.

Input cost inflation fell to a 13-month low, enabling companies to increase their procurement activities. However, capacity pressures persisted, with backlogs of work increasing at the fastest rate in eight months. Simultaneously, Dubai's Purchasing Managers' Index slightly decreased to 55.3, down from 55.5 in December, with businesses reporting improved operating conditions but more subdued expectations for future activity, reflecting some uncertainty in the market.

Owen noted, "Intense competition and cash flow concerns arising from a large amount of backlogged work appear to have made companies doubtful about their ability to continue raising revenues." He added that overall confidence has fallen to its lowest level since December 2022, suggesting a cautious outlook among businesses. The Purchasing Managers' Index (PMI) remains a crucial indicator for gauging economic trends in the manufacturing and service sectors, widely utilized for business decision-making and investment analysis.