Prime Highlights:
The non-oil sector of the UAE witnessed a business activity surge in December as the Purchasing Managers’ Index jumped to a nine-month high of 55.4 from 54.2 in November.
Input costs increased in December, but inflation eased to its lowest level since March.
Key Background:
The Purchasing Managers’ Index for the UAE’s non-oil sector, by an S&P Global report, rose to a nine-month high of 55.4 in December from 54.2 in November. This increase is thought to be rooted in strong demand in the marketplace and is part of the continued expansion in the non-oil private sector according to Vision 2031, which aims to reduce dependency on oil and promote manufacturing, tourism, and technology.
According to David Owen, a senior economist at S&P Global, “The UAE saw its biggest growth in non-oil business activity in nine months. The PMI ended the year on a strong note and is well placed for growth in 2025.” A PMI reading above 50 is a signal of growth, and the UAE has been consistently positive on that count.
Market conditions are buoyant enough to attract new clients and boost orders, business owners said. However, they reported one of the slowest increases in staff levels in over two and a half years-again, this was as a result of persistent capacity problems. There is certainly a boost in demand but companies are facing recruiting challenges that would limit their efforts at scaling up their workforce. Owen said the input costs surged last month but its inflation rate went down to a softest rate since March, while hiring did not recover strongly from its low in November when employment growth reported its worst month in 31 months.
Business optimism over their future expansion prospects declined slightly in December for the second successive month. Similarly, the PMI in Dubai increased to 55.5, with growth in output and new orders having picked up speed, but emirate firms showed less confidence in 2025. The UAE’s performance is once again testimony to the effectiveness of economic diversification strategies, a trend that has also been seen in Saudi Arabia, where the PMI in December reached 58.4, indicating continued expansion in its non-oil private sector.