UAE private sector surges to strongest growth in 9 months on robust demand

Dubai: UAE non-oil private sector activity expanded at its quickest pace in 11 months during November, with the S&P Global PMI climbing to 54.8 from October's 53.8. The reading beat the long-run average of 54.3 and signalled robust business conditions driven by stronger new orders and positive market trends. Nearly a third of firms reported higher output to match demand inflows.

New business grew at its fastest rate since January, fueled by larger client orders, product innovation, market diversification and technology upgrades. This prompted companies to lift production, marking the joint-fastest activity rise in over 18 months alongside December 2024 levels. Outstanding work built up sharply, intensifying capacity strains alongside payment delays from prior jobs.

Firms showed greater appetite for staff in November, with employment rising at the sharpest pace since May 2024. The uptick tied directly to sales gains, though growth stayed modest overall. Purchasing expanded for a third straight month, but stocks fell for a fourth time in five as inputs fed straight into operations. Respondents voiced confidence in supplier reliability to back sales pipelines.

Input costs jumped at the quickest rate in 14 months, linked to living expense hikes and sales-driven wage pressures. Total staff expenses climbed to the largest degree since April 2018. Companies passed some costs to clients, raising output charges at the fastest pace in three months, though still mildly.

"The UAE non-oil private sector has delivered a robust performance in the fourth quarter so far, with November's PMI indicating the strongest improvement in business conditions in nine months," said David Owen, Senior Economist at S&P Global Market Intelligence. "The upturn was often linked to strong customer demand and healthy sales pipelines that encouraged firms to expand both their output and staffing. Although employment growth remained moderate overall, it was still the quickest in one-and-half years, signalling a partial rebound in labour markets after a relatively muted period."

He added: "However, the sharper rise in employment was accompanied by a steeper increase in wage costs, as firms cited the need to raise salaries in response to cost-of-living pressures and skill shortages. This led to a greater uplift in overall business expenses which could contribute to broader inflationary pressures in the coming months."

Business confidence for the next 12 months edged up from October's near three-year trough. Over 13% of firms foresaw higher output, against less than 1% expecting a drop. Strong sales pipelines and a supportive environment underpinned the modest rebound.

In Dubai, the PMI held steady at 54.5, matching its joint-fastest growth since January. Activity accelerated on sharp sales rises, with staffing up at the quickest rate in 18 months. Input stocks dipped for the first time since August as supply chains eased, lead times shortening fastest in a year. Staff cost surges drove the sharpest input price rise since February, prompting modest output charge hikes.