UAE non-oil business activity hits 11-month high on sales boost

Business activity in the UAE’s non-oil private sector economy maintained its robust growth momentum in January as new orders improved, with sales hitting a two-year high amid better market conditions.

The seasonally adjusted S&P Global UAE Purchasing Managers' Index climbed to 54.9 in January, the highest level in 11 months, from 54.2 in December. A reading above 50 indicates economic expansion.

The jump showed a “sharp improvement” in the health of the non-oil private sector in the Arab world’s second-largest economy, with new business marking a sharp increase last month. Output expectations also rose, supporting a steep increase in purchasing, according to the survey.

“UAE's non-oil economy started the year on a solid footing, as new orders increased steeply, prompting firms to lift output and sharply expand their purchases,” said David Owen, senior economist at S&P Global Market Intelligence.

“Stock levels were also boosted as lead times decreased rapidly, allowing companies to reduce some of the strain on business capacity.”

Purchasing Managers Index

Hover to see UAE, Saudi Arabia and Egypt indices since January 2019. Values above 50 indicate economic expansion

Stimulated activity

Firms surveyed attributed the jump in business to “stimulated activity”, as well as improving economic conditions, in sectors such as real estate and technology.

However, some of the panelists indicated a hit to output from rising competitive pressures, shifts in trade patterns, and increased costs.

The volume of sales at non-oil businesses increased at the fastest level recorded in 22 months, “demonstrating a solid turnaround in the pace of growth since the middle of last year”, according to the survey.

“Firms commented on rising levels of domestic client demand, as well as positive reactions to new products and services. This compared with a relatively modest, sharp rise in new orders from international markets,” the report said.

Though sales grew sharply, non-oil companies had to tighten price margins in January in response to a rise in competition that resulted in only a marginal increase in average prices charged last month.

Continued momentum

The UAE is pushing to diversify its economy away from oil and has invested heavily in sectors including technology, manufacturing and tourism. The Emirates’ economy is estimated to have grown 5 per cent in 2025, the UAE Central Bank said in December.

That sharp expansion was driven by a 4.9 per cent growth in the non-oil sector and 5.4 per cent growth in hydrocarbons due to the “faster-than-expected reversal of oil production cuts following the Opec+ quota increases”, the banking regulator said at the time.

Growth is projected to accelerate to 5.2 per cent this year, driven by stronger expansion in both the hydrocarbon and non-oil sectors.

S&P said the improving economic conditions are also reflecting in January purchasing data. Input buying across the non-oil sector last month expanded at the sharpest rate in six-and-a-half years as businesses stockpiled to meet their rising order books requirements.

Optimism on future growth in business in the Emirates also improved last month, hitting the highest level in 15 months. Businesses surveyed widely predicted further improvements in demand conditions, as well as expansion efforts.

Dubai PMI

New business growth in Dubai, the leisure and tourism centre of the Middle East, also hit a 22-month high in January.

Dubai's non-oil private sector businesses attributed the rise to a marked improved operating conditions in the first month of the year.

A sharp rise in client spending and confidence in the economy boosted businesses as the overall rate of sales growth accelerated to the quickest pace since March 2024, according to the PMI survey.

The upturn in business activity also drove employment in Dubai amid renewed stockpiling efforts.

“Firms' assessments of their future activity improved solidly to a four-month high, as firms projected additional increases in client demand,” the survey said.