Non-oil business activity capped off the year with its best performance in nine months in December as robust demand drove an increase in new business, according to S&P Global’s UAE Purchasing Managers’ Index (pdf). The UAE’s PMI jumped to 55.4, up from 54.2 in November, positioning it firmly above the 50.0 threshold separating growth from contraction.

Businesses expanded output due to buoyant market conditions, with businesses securing new clients and increased order volumes. The uptick in new work was driven by “higher demand, projects in progress, discounted prices and favorable weather conditions,” the report said.

Another strong year ahead? “The UAE saw its best expansion in non-oil business conditions for nine months in December, with the latest PMI data closing out another year of continuous growth and putting the sector in a strong position for 2025,” Senior Economist at S&P Global Market Intelligence David Owen said.

Business sentiment for 2025 was optimistic, though levels of confidence were at their second lowest since early 2023.

On the downside, backlogs are piling up: Employment continued to its slow growth rate — marking its slowest in more than two and a half years — due to margin pressures and limitations on staff recruitment. This limited workforce expansion increased the volume of outstanding work and added strain on inventories, with Owen saying “capacity levels remain under considerable stress” and highlighting a “need to boost resources to ensure firms capitalize on demand in the new year.”

Both costs and prices fell: Non-oil companies saw a reduction in input price inflation for the fourth time in five months. Despite the cost of raw materials, shipping, foodstuff and technology rising, average price charges fell due to strong competition driving discounting.

MEANWHILE, IN DUBAI-

Dubai also sees 9M high: The Dubai PMI rose to 55.5 in December — up from 53.9 in November, due to a sharp uptick in output and new orders following increased client demand and busy markets, with rates of growth trumping overall UAE levels.

Employment rose slightly due to the new business growth, while output charges rose and inventories of inputs saw a decline.

Businesses are less confident about the year ahead, with confidence dropping to its lowest level since May 2021 and only 6% predicting output growth.

ELSEWHERE IN THE REGION-

  • Saudi Arabia’s business activity rose at a slower pace, with the headline PMI coming in at 58.4 (pdf), down from 59.0 in November, despite a record pick-up in sales and new orders, while higher material prices drove up input costs;
  • Egypt’s non-oil private sector activity dropped to 48.1 from 49.2 last month on the back of subdued client demand due to rising price pressures, a slump in demand and softened market conditions increasing costs for businesses.
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