UAE non-oil economy holds strong as PMI stays at 20-month high

Dubai: The UAE’s non-oil private sector maintained strong growth momentum in September, with business conditions holding at a 20-month high, as stronger demand at home and abroad supported activity, new orders and hiring.

The seasonally adjusted S&P Global UAE Purchasing Managers’ Index remained unchanged at 55.3 in September, matching its August reading and signalling a marked improvement in operating conditions.

A reading above 50 indicates an expansion in private-sector activity.

The latest data offers further evidence that the UAE’s non-oil economy has recovered from the slowdown seen around the middle of the year, when the regional conflict disrupted trade, supply chains and business activity.

David Owen, principal economist at S&P Global Market Intelligence, said the September data indicated that the UAE’s non-oil economy had “moved past the mid-year slowdown linked to the Middle East conflict”.

“Businesses saw customer demand improve, not just in local markets but abroad as well, with new export business rising at the strongest rate in nearly two years,” Owen said.

Companies reported a sharp increase in business activity during September, while new orders continued to rise.

The improvement in demand gave businesses greater scope to pass higher costs on to customers, however, with selling prices increasing at their fastest pace in more than 15 years.

The increase in selling prices was the strongest since May 2011, according to S&P Global.

Companies reported higher costs for raw materials and freight, while elevated transport and shipping costs continued to put pressure on businesses.

The latest price data marks a shift from earlier in the year, when companies faced rising costs while struggling to pass those increases on to customers because of weaker demand and intense competition.

In April, UAE non-oil companies raised selling prices at their fastest pace in nearly 15 years as higher oil and transport costs, shipping disruption and weaker customer demand squeezed margins.

The stronger demand also encouraged companies to increase purchasing and employment in September.

Staff numbers rose modestly after UAE non-oil companies reduced employment in August, although the pace of hiring remained cautious.

At the same time, companies reported an accumulation of unfinished work as higher output requirements put pressure on capacity.

Businesses also increased their purchases of inputs, including construction materials such as concrete and steel and electrical items. Input inventories rose at their fastest pace since November 2023.

Supplier delivery times improved for a fourth consecutive month, pointing to some easing in supply-chain pressures.

Dubai’s non-oil economy also gained momentum in September, with the emirate’s PMI rising to 54.5 from 54.1 in August.

It was Dubai’s strongest reading of 2026, supported by the fastest increase in business activity of the year and the strongest growth in foreign orders in two years.

Companies in Dubai also increased hiring, although unfinished work continued to build.

Selling-price inflation in the emirate reached its highest level since January 2014 as businesses passed higher costs on to customers.

The September figures build on the recovery recorded during the third quarter. The UAE PMI rose to 52.7 in July after falling to 50.8 in June, when the non-oil economy recorded its weakest improvement in more than five years.

The index then climbed to 55.3 in August, with new business recording its joint-fastest increase in more than two years and output growth reaching a six-month high.

The latest reading therefore leaves the UAE private sector entering the final quarter of the year with solid demand momentum, although rising input and selling prices remain a concern for businesses and consumers.

Owen said firms appeared to be using stronger demand to rebuild margins after months of heavy cost pressure, while volatile oil markets and continuing shipping constraints could keep costs elevated.