UAE non-oil business activity expands to seven-month high in September

Sharp rise in sales and improving business conditions also boosted employment

The improvement in the PMI was led by a strong recovery in demand growth across the non-oil sector, S&P said. Victor Besa / The National

The UAE's non-oil private-sector economy continued to improve in September, as new business intake and stronger sales led activity to reach its highest level in seven months.

The seasonally adjusted S&P Global UAE Purchasing Managers' Index climbed to 54.2, up from 53.3 the previous month. The sharp increase signals a solid and quicker improvement in the non-oil business sector and marks the second consecutive monthly expansion in the Arab world’s second-largest economy.

"The UAE PMI made up some lost ground in September following a trend of moderating growth in the middle of the year,” said David Owen, senior economist at S&P Global Market Intelligence.

“Indeed, the latest reading of 54.2, which sits just below the survey long-run average, suggests that non-oil business performance has recovered well since its trough in July.”

Central to the sharp improvement was a “strong recovery” in demand growth across the non-oil sector in September.

The Dubai skyline. The emirate's PMI edged higher in September to 54.2 from 53.6 in August. AFP

After reaching its weakest rate in more than four years in August, new growth in orders rose to its highest since February, as companies welcomed better demand conditions, increased client engagement and new projects.

While overall growth in sales volumes was supported by domestic customers, orders from foreign clients also rose, albeit at a slower pace, the S&P survey found.

"Over 30 per cent per cent of surveyed firms reported an increase in new order intakes during the month, which drove a sharp improvement in sales growth,” Mr Owen said.

September data also indicated that non-oil private sector companies in the UAE raised the employment levels at the fastest rate since May, to account for the increased business activity.

Economic momentum

Gross domestic product of the UAE, which has been boosting efforts to diversify its economy away from oil, expanded by 3.9 per cent annually to Dh455 billion in the first quarter of this year, according to preliminary estimates from the Federal Competitiveness and Statistics Centre.

Non-oil GDP rose 5.3 per cent year-on-year, contributing more than 77 per cent of total real GDP, data released last month found.

The UAE Central Bank last month increased its 2025 growth forecast for the country’s economy from 4.4 per cent to 4.9 per cent, on a surge in non-oil activity.

The UAE last month also announced the launch of the National Policy for Economic Clusters, with the goal of boosting the country's GDP by more than Dh30 billion.

On Thursday, the International Monetary Fund said the UAE economy is projected to outperform the global average this year, as it is expected to remain resilient to global economic uncertainty and geopolitical headwinds.

The IMF projects the Emirates' GDP to expand 4.8 per cent this year – slightly lower than the UAE Central Bank's forecast – driven by strong non-hydrocarbon growth and Opec production increases before expanding by 5 per cent in 2026.

Dubai PMI

While businesses surveyed remained optimistic about the UAE’s economic growth prospects in the next 12-months, S&P data showed Dubai's PMI also edged higher in September to 54.2 from 53.6 in August.

Dubai non-oil firms reported a sharper increase in new work levels last month. The pace of sales growth also accelerated to an eight-month high in September, after recording a modest upturn a month earlier.

Rising new business led to a robust expansion in output and increasing employment across the emirate's non-oil private sector.

The rate of job creation was the quickest in a year, with firms showing “much stronger optimism” towards future activity in Dubai, S&P Global said.